Pakistani rupee breaks 11-day winning streak against US dollar

• Rupee sheds 0.98 against the dollar.
• Local currency undergoes correction.
• Rupee breaks its 11-day winning streak.

KARACHI: The Pakistani rupee snapped its 11-day winning streak against the US dollar in the interbank market on Wednesday as the local currency undergoes correction.

In the interbank market, the rupee depreciated by 0.98 or -0.46% and fell to 214.88 against the greenback, according to the State Bank of Pakistan (SBP), down from 213.90 at the close of Tuesday's trade.

Head Of Research and Development at Pakistan Kuwait Investment Company, Samiullah Tariq, told Geo.tv that there was "a bit of a correction" as the rupee appreciated "too much".

However, he noted that "things seem under control".

Arif Habib Limited Head of Research Tahir Abbas said that after gaining 11.6% during last 11 trading session, rupee was depreciated by 0.46% today.

"There would most likely be some higher dollar demand and repayments due to which currency has depreciated. However, we believe that rupee is expected to remain strong in the near term."

The development comes after Finance Minister Miftah Ismail confirmed Wednesday that the government has sent the letter of intent (LoI) back to the International Monetary Fund (IMF) following the fulfilment of the pre-requisites, paving the way for the executive board's meeting.

Pakistan’s rupee, bonds, and stocks have rallied as investors bet the nation will win a bailout from the IMF this month and avoid a default.

Dollar bonds due in December were indicated at about 95 cents on the dollar on Tuesday from a low of 85 cents in July, as investors turn more confident the debt will be repaid.

The rupee surged 11% this month to 213.87 per dollar as of Monday, the biggest gainer in the world. The benchmark stock index climbed 9%, the top performer in Asia after Sri Lanka.

Pakistan has adopted austerity measures to win approval from the IMF to resume its stalled bailout package as frontier nations from Egypt to El Salvador battle the threat of a default.

Fitch Ratings and Moody’s Investor Service said in late July they expect the nation to secure $1.2 billion from the IMF, while Saudi Arabia is said to renew its $3 billion deposit in assistance, easing financing pressure on Pakistan.

After completing a slew of difficult prior actions, Pakistan finally received staff-level approval to resume and extend its IMF program, which should pave the way for board approval barring any policy mistakes,” said Patrick Curran, a senior economist at London-based research firm Tellimer Ltd.

“With the program back on track, Pakistan will be given additional runway to avoid a crisis.”