While economic reform programme still in early stages, there has been progress in some key areas. Volatility in the Pakistani rupee has diminished and it is more stable now, helped by improved foreign exchange reserves and a positive impact from a market-determined exchange rate, the International Monetary Fund said.
“While the authorities’ economic reform programme is still in its early stages, there has been progress in some key areas. The transition to a market-determined exchange rate has started to deliver positive results on the external balance, exchange rate volatility has diminished, monetary policy is helping to control inflation, and the State Bank of Pakistan has improved its foreign exchange buffers,” the IMF said in its latest note after staff consultation.
The rupee has gained 4 per cent against the UAE dirham in the last three months, rising from 44.49 on June 28 to 42.7 on September 28.
It witnessed severe volatility in the last two years, weakening from 28.7 on September 27, 2017 to 42.7 on September 28, 2019. The rupee has also received support from the decline in the trade deficit, which shrank nearly 37.6 per cent in the first two months of the current fiscal year.
Provisional central bank data figures showed that the trade deficit fell to $3.97 billion in July-August from $6.37 billion over the corresponding months last year. Pakistan’s foreign exchange reserves also stand at a stable level, reaching $8.465 billion in the week ending September 20 compared to $8.6 billion in the previous week, the central bank said on Thursday.