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Following rumours of an impending agreement between the Pakistani govt and the International Monetary Fund (IMF), the Pakistani rupee began to recover on Wednesday, gaining almost 0.40 paisas against the US dollar to hit Rs211.

The rupee received modest support from the central bank"s attempts to increase dollar supplies while decreasing demand for imports. The rupee gained strength after the central bank stated that there was no scarcity of US cash in the country.

According to the State Bank of Pakistan (SBP), foreign exchange reserves are around $9 billion and "all usable for all uses."

On Tuesday, the Pakistani rupee has become the worst-performing currency in Asia in 2022. In the first 6 months of the year, it lost 16.50 percent of its value. As of yesterday, the native currency had lost 33 percent (or Rs52) in the previous year. On June 30, 2021, the PKR was trading for Rs157.54 versus the USD.

IMF talks

A day earlier, Pakistan declared a "broad agreement" with the International Monetary Fund (IMF) on the next fiscal year"s budget, which has increased to Rs9.9 trillion, as the government agreed to restore a tax on persons earning up to Rs100,000 and a petroleum charge beginning July 1.

The two parties have agreed to gradually implement a Rs50 per litre petroleum charge, beginning with Rs10 per litre in July and increasing to Rs5 per litre in August, till it reaches its maximum threshold of Rs50 per litre in March 2023.

"In collaboration with the IMF, we have locked in the budget for fiscal year 2022-23, and now the Fund will discuss with the State Bank of Pakistan on monetary targets," Minister Of finance Miftah Ismail told a crowd of journalists on Tuesday. 

The budget would be Rs9.9 trillion, up roughly Rs400 billion from the one released by the finance minister on June 10. Ismail presented a Rs9.5 trillion budget, which was just 4% higher than the amended budget for current fiscal year.