KARACHI — The Pakistani rupee continued its downward trend from the previous day, losing another Rs2.99 to the US dollar during interbank trade on Wednesday.
The Exchange Companies Association of Pakistan (ECAP) reports that at midday today, the exchange rate was about Rs294.50 per USD.
Meanwhile, the open market exchange rate for one U.S. dollar was Rs303.50.
According to the State Bank of Pakistan’s (SBP) daily statement, the exchange rate on Tuesday night was Rs291.51.
The rupee’s decline started after the August 9 dissolution of assemblies. There has been talk among market experts about a regulated currency rate being held by the departing coalition government in order to preserve political capital. The dollar was forecast to strengthen against the Pakistani rupee once the transitional administration took power.
Prior to this, during the course of the previous three months, the value of the local currency had held steady at roughly Rs288 per US dollar.
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The newest $3 billion loan programme secured from the International Monetary Fund (IMF) in late June 2023 had been the subject of widespread speculation that it would cause a depreciation of the currency.
As a result of the government’s decision to lift all limits on imports, which were previously managed to manage the country’s decreasing foreign exchange reserves, market speculation suggests the rupee was set to lose territory.
According to the Exchange Companies Association of Pakistan (ECAP), the open market rate of Rs300 per US dollar fell by 1.33%, or Rs4. The 2.5% differential between inter-bank and open market exchange rates (Rs8.5) is more than the 1.5% (about Rs4) margin advised by the International Monetary Fund (IMF).
Topline Research said that on Tuesday, the dollar’s value relative to the currencies of Pakistan and Malaysia declined by 1% and 1%, respectively, while the other 11 currencies comprising the MSCI Asia Emerging and Frontier Markets Index all fell by between 0.1% and 1%.
The Pakistani Rupee has fallen by 26.6% in the past year and 22.3% through the first eight months of 2023, the greatest depreciation among these currencies. Concerns over a worldwide economic slowdown, and in particular China’s growth, pushed the US dollar to a one-month high versus its global peers, according to reports.
Cardholders would be charged an additional Rs1.52 per unit for electricity.
Second, the rising global price of oil has boosted demand for the US dollar in Pakistan, a country that must rely significantly on energy imports to meet domestic demand.
The growing disparity between the two markets is an indication that the rupee will either lose more value in inter-bank trade or gain value in the retail market, bringing the gap closer to the 1.25 percent the International Monetary Fund recommends.
The US dollar was in strong demand relative to its supply in both markets. The IMF mandated that the spread not go above 1.25 percent on any of the five consecutive business days.
It also requested that import restrictions be lifted and said that Pakistan should allow the market to set the exchange rate based on supply and demand.
