Pakistani rupee gains about 1% on IMF effect

The Pakistani rupee firmed nearly one percent on Tuesday on foreign inflows and improved sentiment following the government's agreement with the International Monetary Fund (IMF) for a $7.6 billion emergency loan, dealers said.

The rupee was quoted closing at 79.10/20 to the dollar, compared with Monday's close of 79.80/90. Dealers said the rupee traded as low as 79.05 to the dollar.

Dealers said they expected the rupee to stabilise, at least in the short term, following the IMF accord, after a sharp depreciation this year as a balance of payments crisis developed. By the close on Tuesday, the rupee was 22 percent weaker than it started the year.

"There were some inflows in the market and generally the sentiment has improved due to the IMF announcement," said a currency dealer.

Dealers said there were exporters selling dollars against the forward counters and there were inflows.

Last month Singapore sovereign wealth fund Temasek Holdings had agreed to a further investment of up to $12 billion rupees ($152 million) in Pakistan's NIB Bank via a rights issue, NIB said.

Dealers said this could have been the inflow in the market however there was no confirmation from the bank.

The government's top economic adviser, Shaukat Tarin, said on Saturday he expected the first tranche of an IMF standby credit to be released this month.

In a "Friends of Pakistan" conference on Monday held in Abu Dhabi, potential donors including Saudi Arabia, China and the United States agreed to draw up a plan to help Pakistan in the face of a financial crisis and security challenges, a statement said.

The central bank's currency reserves, at $3.5 billion on Nov. 8, were just enough to cover nine weeks worth imports.

The IMF news made no impact on a stock market. Trading dried up weeks ago due to an artificial floor authorities placed under the benchmark index at the end of August to protect a Karachi market that has dropped 35 percent so far this year.

The Karachi Stock Exchange (KSE) benchmark 100-share index ended flat at 9,184.09 points, just 40 points above its floor as no shares were traded.

Dealers said stocks were trading at least 20 to 25 percent lower in off-market transactions and those losses will be reflected once a floor on the main index is removed.