Mallika Dureja
The Pakistan currency falls to 265 rupees on the open market
Short of money On Friday in pakistan the US dollar was worth 262.6 rupees in the interbank and open markets, which was the lowest it had ever been.
At one point, the currency fell to 265 rupees on the open market and 266 rupees in the interbank market. By the end of the day, it had made a slight comeback.
According to the State Bank of Pakistan, the currency had dropped by 7.17 rupees, or 2.73 percent, by the time the market opened on Friday.
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Since Thursday, the value of the Pakistani rupee has dropped by 34 rupees in the interbank market. This is the biggest drop in both absolute and percentage terms since the new exchange rate system was put in place in 1999.
The value of the Pakistani rupee has dropped sharply since the government removed an unofficial cap on the USD-PKR exchange rate in order to restart a loan programme with the International Monetary Fund (IMF).
Pak Currency Plunges To 262 Against Dollar Amid IMF Aid Uncertainty https://t.co/sd39gNtPOO pic.twitter.com/xAr7iEIIqP
— NDTV (@ndtv) January 27, 2023
The decision was made by the government on Thursday, after the exchange companies said they were taking off a rate cap they had put in place on the open market.
The country needs to finish the ninth review of a $7 billion IMF programme. This would lead to a $1.2 billion payment and also make it possible for friendly countries and other multilateral lenders to send money.
The IMF wants the exchange rate between the dollar and the rupee to be based on the market. They also want a high interest rate and a 17 percent sales tax to be put on diesel and gasoline within a week.The first two requirements have been met.
According to information from the Exchange Companies Association of Pakistan (Ecap), a lot of money started coming into the country through official channels on Friday.
Hameed Khokar, a financial analyst at CX investments, thought that the flow of remittances would pick up in the next few days and pass $2.5 billion per month again, getting closer to $3 billion in the next few months. He also said that money sent home from exports will get better in the coming months.
Khokar said that the biggest challenge for the government was to keep up the foreign reserves and improve the currency market so that the currency parity stays stable and import goods don’t get stuck at the port.
More than 9,000 containers are also stuck at the Karachi ports because their dues haven’t been paid. Some of these containers have essential goods, petroleum products, LNG, soybeans, and other goods.
Other financial experts agreed with the government’s decision to take off the dollar’s cap. They thought that if this had been done sooner, the country would not have had to pay a huge price for inflation in the coming months and would not have lost $6 billion in different ways.
Saad bin Naseer, who is the director of the financial data and analytics site Mettis Global, also said that after the cap was lifted, remittances, including money from exports, had started coming back through the official channels.
Zafar Paracha, the head of the Ecap, said that the central bank had said exchange companies would get dollars, but they hadn’t gotten them yet.
He also said that the rupee’s decline could be stopped if there was more supply and the government’s “complex” policies were changed. Also, the central bank’s foreign exchange reserves kept falling and hit a new nine-year low of $3.678 billion during the week that ended on January 20.
Thursday, the SBP said that foreign debt payments caused Pakistan foreign currency holdings to drop by $923 million over the past week. But financial experts are still sure that the economy will get better now that Prime Minister Shahbaz Sharif has said the government will follow all of the IMF’s rules for getting back on track with its programme.
Friday, Prime Minister of pakistan Shahbaz Sharif said he was sure that the IMF would release the money by the end of the month. He said that the government was talking with the IMF to find a quick solution.
