KARACHI: On Monday the country’s currency market recorded the historical depreciation of the rupee as the US dollar continued to gain value. The rupee saw a sharp drop of Rs 6.70 paise against the dollar at the interbank market and traded at Rs 269.30. In the open market, the rupee gained around one rupee and reached Rs 273.
Since IMF delayed the ninth review, Pakistan has tried every attempt to convince the global money lender of the revival of the lone tranche. The government removed the unofficial cap on the exchange rate to fulfill the IMF’s conditions. The hike in petrol prices on Sunday was also part of making IMF happy. It’s evident that the country is moving with the quote of Prime Minister Shehbaz Sharif: “Beggers can’t be choosers”.
General Secretary of the Exchange Companies Association of Pakistan (ECAP), Zafar Paracha said that the shortage of dollars has caused the depreciation of the rupee. He said that banks were running short of dollars and no arrangements were made to restart the flow. Zafar added that the market was in a state of panic and people would neither export proceeds nor sell remittances until the situation settled down.
Zafar Paracha lashed out at the government for delaying the removal of the unofficial cap. He said that the delayed announcement made the conditions worse and that policies should not be decided according to the mood of the finance minister. Economics analysts believe that the local currency would further weaken against the foreign currency and slide down to Rs270 after the International Monetary Fund (IMF) approved the tranche of $1.2 billion.
On Thursday, after the government removed the unofficial cap on the exchange rate, the value of rupee dropped by Rs24.45 in the interbank market. The gain in dollar’s value is said to be the largest single-day appreciation since 1999 (the time when the new exchange rate system was introduced).