The US dollar climbed above Rs193 in the interbank market on Friday morning, reaching a new all-time high and breaking its previous day’s record which breached the Rs192 mark.
According to the Forex Association of Pakistan (FAP), the day’s start saw the greenback appreciating by Rs1.10 from the previous day’s close of Rs192 and reaching Rs193.10 around 11am in the interbank trade.
Today is the fourth consecutive day that the dollar has risen to a record high against the rupee, with the international currency hitting a high of Rs188.66 in the interbank market on Tuesday, then sore to Rs190.90 on Wednesday and rising past Rs192 on Thursday.
Alpha Beta Core Chief Executive Officer Khurram Schehzad told Dawn.com it was expected that the value of dollar would rise further today, linking the development to the expected strengthening of the dollar in the international market and increase in interest rates in the US.
“Moreover, our macros are weak and the IMF (International Monetary Fund) is also not on board,” he added, referring to the uncertainty surrounding a deal with the international moneylender and delay in the release of a $1 billion tranche by it.
In light of these reasons, Schehzad explained, the currency market was down and the rupee continuing to lose ground against the dollar was expected.
This freefall of the rupee against the dollar has also been attributed to the country’s high import bill.
A Dawn report on Wednesday said the rising exchange rate had rattled the economy.
The rupee had been losing its value mainly because of an uncontrolled rise in imports and a relatively slower pace of growth in exports. This was reflected in the trade deficit, which reached $39 billion in July-April.
Meanwhile, Mettis Global — a web-based financial data and analytics portal — has attributed the dollar’s upward trajectory to the ongoing economic crisis in the country, particularly melting foreign exchange reserves and political uncertainty.
Foreign exchange reserves of the State Bank of Pakistan declined by $190 million to $10.308 billion during the week ended on May 6, the central bank said on Thursday. The overall reserves of the country also dipped to $16.375bn while the holdings of the commercial banks were $6.067bn during the week.
The day-to-day valuation of the local currency could cause a serious panic-like situation as investors are found clueless. The rising inflation and the devaluation of the local currency mean decreasing purchasing power of consumers as traders ask for higher profits to save their investments.
Malik Bostan, chairman of the FAP, has suggested restricting the import of non-essential goods to prevent the dollar from rising further against the rupee.
More to follow