KARACHI: The Pakistani rupee held steady against the dollar on Thursday as the market searched for direction in the midst of the government's ongoing contentious negotiations with the International Monetary Fund (IMF).

According to data from the State Bank of Pakistan, the US dollar ended the day at Rs268.83 in the interbank market after the local currency declined by Rs0.94 (SBP).

According to Saad Ali, a capital market specialist, the rupee is increasing due to two factors: the market's optimism for the continuation of negotiations between the IMF and the government, as well as the actions the government is doing, as well as a decrease in speculation.

 The rupee has been declining since a currency ceiling was removed on January 25 in order to transition to a market-driven exchange rate.

When compared to the rupee's closing value of Rs230.89 to the dollar on last Wednesday, the local currency has lost Rs38, or 14.1%, overall since January 25.

Following the sharp decline, the rupee had a 16% decline, becoming the region's worst-performing currency thus far this year.

The crisis-affected nation has only around three weeks' worth of import coverage in foreign exchange reserves, and it is currently experiencing a severe balance of payments problem. To prevent default, Pakistan is attempting to obtain international financing.

The central bank's foreign exchange reserves were $3.7 billion as of January 20.

It should be highlighted that even while export activity was low, the exporters drew more loans after the government decided to eliminate the self-imposed cap. This implies that exporters borrowed (at high rates) in the local currency but failed to remit their export revenues.

This amount is thought to be roughly $2.5 billion by analysts. Having received a windfall, they would rush to repay their high-interest loans and buy raw materials before the prices rise rather than waiting for the rupee to weaken much further, according to Tresmark.