Pakistan’s rupee surged after the nation’s central bank delivered a larger-than-expected rate hike to rein in inflation, as the country sought to secure an International Monetary Fund bailout to shore up the economy.
(Bloomberg) — Pakistan’s rupee surged after the nation’s central bank delivered a larger-than-expected rate hike to rein in inflation, as the country sought to secure an International Monetary Fund bailout to shore up the economy.
The rupee climbed 2.9% to 277 per dollar on Friday, according to the foreign-exchange desks at AKD Securities Ltd. and Arif Habib Ltd. in Karachi. The central bank increased its key rate by 300 basis points to 20% on Thursday. Most economists expected a 200-basis-point hike.
Pakistan is stepping up efforts to secure a $6.5 billion financing from the IMF to avert a default, as the nation struggles to meet billions of dollars in debt repayments by June. The rate hike increases the likelihood of IMF aid and limits any drop in foreign reserves as it curbs the demand for imports, according to Bloomberg Economics.
Pakistan is committed to repay $2.9 billion of foreign debt by June, Governor Jameel Ahmad said Thursday. Officials are hopeful that another $4.3 billion of loans will be rolled over and refinanced. The nation’s reserves stood at $3.8 billion as of late February.
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