Dollar’s double century in interbank shatters record
The US dollar has been on a one-way path –– upwards –– against the Pakistani rupee since the past week, and the trend continued Thursday when it finally breached the Rs200 mark in the interbank trading.
The interbank rate of the dollar on closing at 3pm was Rs200 after depreciation of 0.81percent.
The greenback crossing the Rs200-threshold was a question of when and not if, owning to the meteoric rise in its value against rupee. The value of the US dollar went up by Rs1.81, or 0.91percent and was trading at Rs200.20 at 11am during intraday trade.
Meanwhile, the dollar closed at Rs201 in the open market, an increase of 50paisa compared to Wednesday. The difference in the buy and sell rate in the open market has jumped to Rs2, which usually varies between 10paisas and 15paisas.
The difference in the rates of interbank and open market has also squeezed to Rs1 only, which is usually around Rs 2.
The greenback closed at Rs198.39 Wednesday, after gaining Rs2.65 from its closing value of Rs195.74 Tuesday.
In the open market, the US dollar already breached theRs200-mark two days ago.
Since the new government took power April 11, the greenback has appreciated by Rs18.09 in the interbank market. In the open market, the foreign currency rose by Rs15.50 during the same period.
Experts have said the economic and political uncertainty was fueling the dollar’s rise and hurting the rupee’s value.
The market has set its eyes on the ongoing talks between the International Monetary Fund (IMF) and Pakistan in Qatar, with hopes that a good news from there would clip the dollar’s rise.
During the first rounds of talks that concluded Wednesday, Pakistan assured the Fund that it is ready to take tough decisions like revoking the subsidy on fuel and controlling the rising current account deficit.
The talks were being held to resume the $6 billion IMF program for Pakistan with a possibility of extending it by $2 billion.
Finance Minister Mifah Ismail hoped that an agreement would be reached by next week.
However, unless the Fund announces assistance, the rupee would likely remain under pressure.
PM Shehbaz takes notice
Prime Minister Shehbaz Sharif, Thursday, took notice of the rupee’s depreciation. He also called a meeting to discuss the economic situation.
On Wednesday, a meeting chaired by the prime minister, decided to ban the imports of luxury and non-essential items to control the rising current account deficit and continuous depreciation of the rupee.
The government plans to save $500m to $600m annually by banning the imports of luxury cars, jeeps, speed boats, and hiking import duties on mobile phones and machinery.
The duty on mobile phones would be raised from Rs6000 to Rs44,000. The duty on the import of cars over 1000cc would go up by 100percent. According to the Federal Board of Revenue sources, the duties on tiles, household appliances, steel and ceramics would also go up. PM’s meeting with forex dealers
Earlier this week, the government attempted to exert some control over the price of the dollar in the open market by reaching out to the heads of all the major exchange companies in Pakistan.
Prime Minister Shehbaz Sharif Monday held a virtual meeting with the Forex Association of Pakistan.
Malik Bostan, chairman Forex Association of Pakistan, said that he had told the premier that unless the government controlled the rupee value in the interbank market, forex dealers could do nothing to control the open market.
“If the US dollar depreciates by Re1 in the interbank market, we would drop the value by Rs2,” he said adding that the free market could be controlled by the forex dealers but the interbank market was under the central bank.
Wakilur Rehman reported Monday that the central bank has refrained from intervening in the interbank market so far.
Over the weekend, Federal Finance Minister Miftah Ismail, in a meeting held at the Finance Division, reviewed the exchange rate and discussed plans for ensuring its stability.
He assured forex traders that the government was firmly resolved to ensure stability in the forex market and that the government would take all possible measures to keep the rupee stable against the dollar, but without interfering in the market mechanism.
During the meeting, it was proposed that the exchange companies should be facilitated to increase the flow of remittances to Pakistan. Several other measures were also suggested for curbing outflows of foreign exchange from Pakistan through informal channels.
Exporters blamed for slide
Some of the currency dealers, speaking on the condition of anonymity, told SAMAA Money’s Wakilur Rehman that the sustained slide of the rupee was also caused by exporters who were not transferring the revenue generated by their exports to the government.
This has pushed up the demand for the foreign currency, exporters added.