The rupee finally gained Rs3 against the dollar on Friday as the dollar slid down to Rs199.50 in the interbank market.
The development came just hours after the government raised the prices of petroleum products to comply with International Monetary Fund (IMF) stipulations.
On Thursday, the dollar continued to fluctuate and closed at Rs202.
Meanwhile, the Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index opened in the green on Friday and soared more than 900 points in the first hour of trading.
According to the PSX website, the index reached 43,509.38 by 11:24 am after gaining 967.67 points from the previous day’s close of 42,541.71.
On Thursday, the government raised the prices of all petroleum products by Rs30 per litre, which is the highest-ever increase in the prices of all petroleum products in one go, after the IMF emphasised abolishing the subsidies on commodities.
Government has decided to increase the prices of Petrol, High Speed Diesel, Kerosene Oil and Light Diesel Oil by Rs 30 per litre from Friday May 27, 2022. New prices will go into effect at midnight. The new price of petrol will be Rs 179.86 & diesel will be Rs 174.15 per litre.
— Miftah Ismail (@MiftahIsmail) May 26, 2022
The fuel subsidies had been a sticking point in talks with the IMF, and the resumption of a $6 billion facility stalled since early April.
Earlier, Dawn reported an official as saying this was the first step towards convincing the IMF to release the next tranche of $1bn at the earliest.
Announcing the price hike, the finance minister expressed the hope that markets would stabilise, investors would take the decision positively, the exchange rate would improve, and the economy would balance out.
He said the ex-depot prices of petrol would increase to Rs179.86 per litre, and high-speed diesel (HSD) to Rs174.15. Still, he added that the government would be paying about Rs56.71 per litre subsidy on HSD.
The greenback has risen by Rs19 since the PML-N-led coalition government took over on April 11. The dollar was valued at Rs182.30 back then.
The country’s rising import bill, widening current account deficit, and depleting foreign exchange reserves have caused a persistent decline in the rupee’s value since May 10.
— SBP (@StateBank_Pak) May 27, 2022
Meanwhile, Pakistan’s foreign exchange reserves decreased by $75 million to $10.1bn during the week ended on May 20 due to decreased government external debt payments, ARY News reported.
In its weekly report, the State Bank of Pakistan noted that the reserves stood at $10,088.6 million compared to $10,163.6 million on May 13.
The country’s overall liquid foreign currency reserves stood at $16,149.8 million.