Karachi August 24 2023: The Pakistan Rupee has experienced a decrease in its value against the Dollar for the seventh consecutive day, crosses 300 in interbank for the first time.
Dr. Inayat Hussain, Deputy Governor SBP, pointed out that rising demand of dollars among the masses and import uplift are the primary drivers in dollars fluctuations. He disclosed this while briefing the Senate Committee on consistent fluctuations in dollar price.
The deputy governor stated that our current responsibility is solely to maintain a functional currency market and prevent any form of market manipulation.
This decline is attributed to uncertainties surrounding the ability of the caretaker setup to enact reforms and attract foreign direct investment, especially given the recent removal of import restrictions by the central bank.
In the interbank market, the Pakistan Rupee has dropped by 59 paisa or 0.2 percent, bringing its trading rate to cross 300 against the Dollar for the first time in country’s history. Notably, during the previous session, the Rupee concluded trading at 299.64 against the Dollar in the same market.
Conversely, in the open market, the Rupee has slipped by 50 paisa against the Dollar, resulting in a trading rate of 316.5 (PST 11:00). The Rupee’s closing rate against the Dollar in the open market yesterday was 316.
Pakistan has agreed with IMF that the difference between Interbank and Open market should not be of more than 1.25%, which is PKR 3.75 at this rate. However, widening gap between open and interbank is the concerning sign for the currency market.
“Policy of following Open Market parity was flawed, thus difficult to sustain, this’s been witnessed the Open market (informal mkt) is driving the formal market (interbank mkt), means PKR 5% informal leading 95% formal mkt” says Economist and cofounder of Apha Beta Core Khurram Schehzad.
Pakistan’s Current Account Balance (CAB) took a negative turn, reaching USD 809 million in July 2023, following a surplus of USD 504 million in June 2023 as Central Bank remove restriction on imports of goods.
The country’s imports of goods surged to USD 4.2 billion in July 2023, in contrast to the USD 3.1 billion recorded in the previous month. Meanwhile, goods exports remained stagnant at USD 2.1 billion in July 2023, mirroring the figures from the previous month.
