PKR under pressure, fell to 229 against the dollar at the interbank

The rupee continued to decline against the dollar on Monday, hitting a new low of Rs 229.88 in the interbank market.

According to the Forex Association of Pakistan (FAP), the rupee fell by Rs 3.63 to Rs 232 at around 1:30 pm against Friday’s Rs 228.37.

The dollar finally closed at Rs 229.99, a fall of 0.66 pc in the local currency, according to data shared by the State Bank of Pakistan (SBP).

Saad Bin Naseer, Director, Metis Global, said the rupee remained under pressure due to “political uncertainty” surrounding the Punjab chief minister’s election.

“Meanwhile, on the demand front, importers have expedited the process of opening their letters of credit in view of the depreciating rupee,” he said, adding that exporters were also depositing their money abroad so that they could return their returns. to maximize.

“The government, along with the State Bank of Pakistan (SBP), should issue guidelines to ensure that exporters convert their dollar earnings into rupees immediately after receiving payment,” he said.,

He said delays in attempts by exporters to maximize their rupee earnings have wreaked havoc on the exchange rate, leading to a significant shortage of the greenback in the market.

‘No practical solution’

In his analysis, Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan, said he was expecting a weakening of the local currency as “no practical measures are being taken to stop the dollar’s flight”.

While he agreed with Naseer that developments on the political front were contributing to the rupee’s depreciation, he said these developments had a minor role in the depressing exchange rate situation.

He pointed out that banks were trading the dollar in the interbank market with a “large gap” between the buying and selling rates.

Reading: Is the rupee too weak to recover?

“This has raised concerns, while no practical measures are being seen by the government to stop them,” he said, adding that ultimately the common man will have to face the consequences.

He said, ‘It is incomprehensible why the government is not stopping them. […] Be it the government, political parties or banks, it seems everyone is on a honeymoon.”

Paracha urged the political parties and other stakeholders to sit together and prepare a plan to save the economy of the country.

rupee depreciation

Between April 7 (when then-prime minister Imran Khan was ousted from power) and July 22, the rupee depreciated 21.3 per cent against the US dollar due to trade deficit and rising political instability and uncertainty.

After touching 211.93 on June 22, the rupee had risen to Rs 204.56 in the first week of July. It continued to lose value against the dollar then, but registered a modest increase when the country reached its staff-level agreement with the IMF on July 15. ,

Since then it has continued to decline in every session.

Last week, the rupee lost 8.25 per cent of its value against the US dollar within a week: it closed at an all-time low of 228.36 per dollar on July 22, up from 210.95 per dollar on July 15.

For its part, the SBP attributed the rupee’s fall to a “market-determined exchange rate system” under which current account conditions, news stories and domestic uncertainty contribute to daily currency fluctuations.

In an apparent effort to cushion depreciation, the SBP said on 20 July that a “better measure” of the rupee’s strength was the real effective exchange rate, which takes into account the currencies in which Pakistan trades in inflation-adjusted terms. .