KARACHI: After suffering significant losses for eight sessions in a row, the rupee on Wednesday resisted further decline and recovered Rs1.48 against the US dollar in the interbank market.

Currency dealers said the local currency bounced back on unconfirmed media reports about a $2.1 billion rollover and $600 million loan from China.

“After the $3bn Standby Arrangement with the IMF, many inflows were expected, and some of them have been materialised. It changed the market sentiment from extremely worried to hopeful,” said Atif Ahmed, a currency dealer in the interbank market.

The dollar rate fell to Rs287.04 from Rs288.52 a day earlier.

Currency dealers said the opening of letters of credit has been made easier after an agreement with the IMF, but obtaining dollars from banks remains challenging. The SBP has allowed banks to open LCs upon arranging dollars.

The open market also witnessed a Rs1.50 fall in the dollar rate Rs292.

Dollar imports

Meanwhile, the SBP issued a circular on Tuesday related to the export of foreign currencies other than the US dollar and the import of dollars against it. The SBP said the exchange companies, on a need basis, may import cash US dollars against the value of their export consignments of permissible foreign currencies.

“Exchange companies, on a need basis, may import cash US dollars against the value of their export consignments of permissible foreign currencies within five working days, through reputed cargo/security companies. This arrangement shall initially be in place till Dec 31 and will be subject to the condition that total cash US dollars imported by an Exchange Company during this period shall not exceed 50pc of the value of its export consignments,” said the SBP’s circular.

“Since we have been allowed 50pc cash dollars through cargo or security companies, it will provide a greater amount of cash to the open market that will ultimately reduce the price difference with the interbank market,” said Zafar Paracha, Secretary General of the Exchange Companies Association of Pakistan.

Published in Dawn, July 27th, 2023