Rupee reaches new low after crossing 300 against USD
The Pakistani rupee reached a record low against the US dollar on Thursday after the greenback was traded at Rs300.26 in the interbank market.
The open market also saw an increase in the dollar’s value after it gained Rs2 and was being traded at around Rs314/$.
The difference between exchange rates in the two markets has increased threefold to more than 4%, or Rs14, compared to the 1.25% (around Rs4) gap recommended by the International Monetary Fund (IMF), putting a question mark over the ongoing $3 billion loan programme.
During the previous day’s trade, the greenback inched closer to the 300 barrier and was being traded at around Rs299.63/$. The local currency has consistently lost value during the week’s trade.
On the other hand, the Pakistan Stock Exchange continues its bullish trend, with the PSX opening the day’s trade with a 528-point increase, reaching 47,946 points.
A day earlier, the country’s central bank stated that pent-up demand for imports and people rushing to buy as many dollars as possible were causing the rupee’s fall, however, it showed its inability to bring immediate stability to the market.
In a briefing to the Senate Standing Committee on Finance, central bank Deputy Governor Dr Inayat Hussain said “there was a substantial increase in demand for the dollar”.
The latest wave of depreciation will further fuel inflation due to increase in prices of fuel, electricity, transport, pulses and other durable and consumable goods.
Hussain said that dollar demand had been on the rise after the central bank lifted restrictions on imports under an International Monetary Fund (IMF) deal.
Pakistan has committed to the IMF that the difference between open and inter-bank markets would not be more than 1.25%.
According to this commitment, the rupee’s value in the inter-bank market should now be more than Rs310 per dollar.