The spread in rates between the interbank market and the free market narrowed considerably on Tuesday, as the relaunch of the International Monetary Fund’s (IMF) Extended Financing Facility (EFF) put an end to the “speculation” that had prompted a widening of the difference of at least 6 rupees. -10 in the last two weeks.

During the last sessions till Monday, the spread in the two markets – interbank and open market – widened sharply and reached 10 rupees per dollar. The open market is the primary source for the general public to purchase foreign currency.

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On Tuesday, however, the difference narrowed as the local currency gained nearly 8.5 rupees in the open market, closing at 220 and 222 for buying and selling, respectively, against the US dollar.

On Monday, the Rupee closed at 228.50 and 230.50 long and short, respectively, against the US Dollar.

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Talk to company registrarPakistan Forex Association Chairman Malik Bostan said the discrepancy was due to speculation in the foreign exchange market. The resumption of the IMF program put an end to this, he added.

“Previously, there was widespread uncertainty in the market regarding funding from the global lender and subsequent funding from other multilateral financial institutions, but now Pakistan is certain to receive $1.1 billion from the IMF.” , did he declare. company registrar.

“This will open the door to additional funding from the Asian Development Bank, the World Bank and friendly countries.

“The market is largely driven by sentiment. When there is uncertainty, the difference between the value of a certain currency in the two markets increases,” he said.

Forex: the interbank gap, the open market widens

Currently, he added, banks are buying dollars on the open market because there is an oversupply there.

On Monday, the IMF approved the EFF revival for Pakistan, paving the way for a $1.17 billion inflow.

In addition, to support program implementation and meet higher financing needs in FY2023, as well as catalyze additional financing, the IMF Board approved an extension of the EFF to end-June 2023 and an increase in access of SDR 720 million which will bring total access under the EFF to approximately $7 billion.