USD crosses Rs229 in interbank market

The Pakistani rupee further depreciated on Thursday as the US dollar rose above Rs229.98 in the inter-bank market, setting a new record.

As economic challenges for the country increased, the dollar’s meteoric rise continued as commercial banks reportedly resumed lines of credit for oil imports at high costs.

The fresh high of the USD comes in response to the rising demand for the foreign currency, despite a lack of supply in the interbank market.

Explaining the factors behind the significant depreciation of the rupee, the State Bank of Pakistan (SBP) has stated that the current account situation, under the dynamic market-based exchange rate system, corresponds to news of internal uncertainty. This combination has led to fluctuations in the value of the rupee on a daily basis.

Read Tarin disputes govt’s claim of reaching agreement with IMF

The central bank furthered that the dollar's appreciation is also a result of an aggressive interest rate policy adopted by the United States Federal Reserve to control internal inflation.

Prime Minister Shehbaz Sharif sought an urgent board meeting of the International Monetary Fund (IMF) on Wednesday to approve Pakistan’s request for a bailout package, as the rupee was beaten for the third day in a row due to high political volatility and a pause in major foreign loans inflows.

Chairing a meeting on the rapidly deteriorating external sector situation, Shehbaz directed Finance Minister Miftah Ismail to request the IMF for approval of Pakistan’s loan before going on recess from next month, at least three meeting participants told The Express Tribune.

The prime minister chaired the meeting shortly after Ismail and a senior official of the SBP held separate meetings with journalists in Islamabad to explain the reasons behind a rapid fall in the value of the rupee and jittery markets.

Read Rupee slides to record low of Rs226 against USD

The country is now ready to sell its two LNG-fired power plants to the United Arab Emirates (UAE) at a negotiated price within a few days by cutting down the competitive privatisation process that takes about one and a half years.

The government is also willing to give a seat to the UAE government on its blue-chip companies for another $1 billion to stop the current economic meltdown – that, too, through a government-to-government deal and promulgating a presidential ordinance.