KARACHI: Pakistani currency gained strength on Friday and recovered by Rs1.81, bringing it up to Rs200.20 against the US dollar in the inter-bank market on Friday, ending the two-week-long free-fall.
Similarly, the Pakistan Stock Exchange surged 2.25% (or over 950 points) to 43,497 points just before noon.
The recovery comes after Finance Minister Miftah Ismail announced to increase prices of petroleum products by Rs30 per litre last night with effect from Friday (today). The action is expected to be followed by a revival of the multibillion-dollar loan programme by the International Monetary Fund (IMF) which has been on an eleven-month hold, while Pakistan needs over $7 billion to repay the foreign debt and finance the current account deficit over the next months.
The IMF is now expected to release the next tranche of $1 billion soon.
The global lender had conditioned the resumption of the $6 billion bailout package upon the reversal of certain government policies, including fuel subsidies and withdrawal of the tax amnesty scheme, as well as demands for an increase in electricity tariffs, imposition of new taxes and ensuring fiscal savings aimed at bringing down the projected primary budget deficit of Rs1.3 trillion to the earlier agreed limit of Rs25 billion surplus.
Besides, friendly countries and other multilateral lenders are also expected to announce fresh funding to Islamabad.
China and Pakistan have reaffirmed their support for each other’s “core interests and major concerns,” while vowing to further enhance economic and defense cooperation during Foreign Minister Bilawal Bhutto’s maiden visit to the neighbouring country on Tuesday.
Moreover, Gulf Cooperation Council (GCC) Secretary-General Dr Nayef Falah Al-Hajraf on Thursday agreed to explore further avenues to enhance bilateral trade and economic ties at the World Economic Forum in talks with Bilawal as well.
The likely inflows will help improve the county’s foreign exchange reserves and improve its capacity to make international payments.
The reserves had fallen to a critically low level of six-week import cover at $10.08 billion.