ISLAMABAD - The under-pressure Pakistani rupee is likely to stabilise in the near future as the Finance Ministry is finalising loan proposals of $650 million from private commercial banks to build the foreign exchange reserves, which would help control rupee depreciation, it was learnt on Saturday.

“The government is finalising loan proposals of $650 million through private commercial banks, foreign and local, and bringing resources from abroad to further strengthen foreign reserves, which will help stabilise Pakistani rupee,” said a finance ministry official wishing not to be named. He further said that things had calmed since it happened (proposal of loan worth $ 650 million).

Talking about the sharp rupee deprecation against US dollar, he said, “The State Bank of Pakistan is responsible for this and it has taken measures to stabilise the market which was driven by negative sentiments and speculative activity.”

The first tranche of IMF worth $550 million under $6.4 billion loan agreement under the Extended Fund Facility (EFF) could not stop the falling trend in the rupee value against US dollar. Pakistani rupee reached 107 against US dollar in the open market during the last week due to the speculations that the government and IMF have agreed to increase the dollar value to Rs 110.

However, the top officials of the Finance Ministry and the State Bank of Pakistan (SBP) have termed it speculations, saying the rupee deprecation has nothing to do with the IMF agreement.

“Some handpicked people are involved in speculations regarding the rupee deprecation for their own benefits against the national interests. However, the situation is improving due to increase in foreign exchange reserves,” Finance Minister Senate Ishaq Dar told The Nation. Rupee would stabilise with increase in foreign reserves in the weeks to come, Dar concluded.

State Bank of Pakistan Governor Yaseen Anwar informed the media in Lahore the other day, “Rupee’s devaluation has nothing to do with the International Monetary Fund (IMF) agreement according to which Islamabad will be given over $6 billion under an extended lending facility in the next three years.” He added, “The recent rupee devaluation is market-driven and because of market forces.”

It is worth mentioning here that local currency lost 7.5 per cent since the PML-N government assumed power in the first week of June this year.

The dollar value reached Rs 107 during the last week, which was Rs 100 when PML-N took over on June 5, 2013. Pakistan’s public debt has risen to around Rs 400 billion in over three months (June to September) due to the recent surge in dollarisation of the economy. The country’s debt increases by Rs 60 billion with the increase in the dollar value by Rs 1 (for example debt will jump by Rs 60 billion if the dollar value rises to Rs 106 from Rs 105).

Similarly, prices of imported commodities, including petroleum products, rise due to the rupee deprecation against dollar, which fuel inflation in the country.

Dr Kaiser Bangali, an eminent economist and former adviser to Sindh chief minister on planning and development, said there was no short-run solution to control the rupee deprecation against US dollar. “Rupee will remain under pressure if the country’s imports remain more than its exports,” he said and added the government should control its imports by using alternative measures.

Meanwhile, currency dealers said the factor of Haj had also raised dollar’s demand. They are of the view that 150,000 Hajis would require $700 million to $750mliion for their consumption, putting pressure on both inter-bank and open markets.