The US dollar’s rally continued on Wednesday as it advanced further by 65 paise to set a new record against the rupee during intraday trading in the interbank market.
According to the Forex Association of Pakistan (FAP), the greenback was trading at Rs 177.50 in the interbank market at 12:25 pm.
The selling rate of dollar in the open market was Rs 178.50 and the buying rate was Rs 178.
Informed analysts and brokerage houses expect the dollar to touch the Rs 180 mark soon, indicating that the fall in forex reserves coupled with higher inflation will continue to devalue the purchasing power of the local currency.
The rupee is depreciating against the US dollar despite reports of successful negotiations with the International Monetary Fund (IMF) and release of $3 billion from Saudi funds.
Shaukat Tarino, Finance and Revenue Adviser to the Prime Minister on Saturday announced That the State Bank of Pakistan (SBP) had received deposits of $3 billion from Riyadh.
Pakistan has also announced plans to launch sukuk bonds to raise an additional $1 billion.
Malik Boston, president of the Forex Association of Pakistan, attributed the rising value of the dollar to a steady increase in demand from importers.
He said that if the loan installment is received from the IMF in January, then the pressure on the rupee may ease.
Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan, termed the rising demand for the dollar as “dangerous for the money market”.
He hoped that the issue of $1 billion sukuk bonds would improve the supply of the greenback in the market, which could then lead to a fall in the value of the dollar against the rupee.
Saad Hashemi, executive director of BMA Capital, said, “The rupee has weakened due to the widening trade deficit as imports reached close to $8 billion last month.”
Hashemi said government measures to control imports and approval of IMF funding through other means such as the World Bank and the Asian Development Bank would help strengthen the Pakistani rupee in the near future.
The demand for the greenback has been high since the beginning of the current financial year. Since July, the US dollar has gained 12 per cent or Rs 18.88 against the local currency.
Central bank Reported On Thursday, the country’s foreign exchange reserves fell by $244 million to $16.010 billion during the week ended November 26. SBP did not give any reason for the fall, but experts believe it was due to loan repayment.
Additional input from Reuters