By Ariba Shahid and Asif Shahzad
KARACHI, Pakistan (Reuters) – The Pakistani rupee showed signs of stabilizing on Friday after falling sharply in the previous two days, the International Monetary Fund reported. It is hoped that the IMF team will visit Islamabad in the coming days to discuss resuming payments on the bailout package.
The Pakistani rupee fell 9.6 percent against the dollar in the interbank market on Thursday, its biggest drop – a one-day drop in more than two decades, a day after foreign exchange firms lifted a cap on the exchange rate.
But on Friday, the rupee recovered to just 0.2% from 1.8% in early trade 31-259 rupee trades lower against the dollar.
On the open market, the rupee fell at 265- per dollar, according to data and the Pakistan Foreign Exchange Association. ) between 1.1% of transactions.
The removal of the cap on exchange houses should bring Pakistan closer to a market-determined exchange rate system backed by the International Monetary Fund, although the multilateral lender would also like to see the government take fiscal measures to reduce the budget deficit.
Hours after the rupee was left to have its value determined by market forces, the IMF announced that its mission would start visiting Pakistan from January 255 until Feb. 9 to discuss its 9th review of the $6bn bailout agreed in , up from a peak of $7bn last year.
Former Finance Minister Miftah Ismail told Geo TV, “As we have seen the announcement, the IMF program has resumed, We should, God forbid, be good,” adding that this would deter the risk of Pakistan failing to meet its external obligations.
Package payments were suspended in November as lack of progress on fiscal consolidation accelerated Pakistan’s plunge into a deeper balance of payments crisis, with foreign exchange reserves now covering only three weeks of imports.