Rupee’s free fall extends for sixth day in a row

Currency touches new historic low at Rs229.88 against dollar

KARACHI:

The rupee’s free fall continued for the sixth successive working day on Monday, as it slumped 0.66% (or Rs1.51) to a new historic low at Rs229.88 against the US dollar in the inter-bank market after banks reported a notable reduction in supply of the greenback.

Pakistani currency remained highly volatile and briefly surpassed Rs232 against the greenback during the day despite assurances by the authorities that a staff-level agreement with the IMF had helped the country fully meet the required foreign funding needs for the current
fiscal year.

The currency had closed at Rs228.37 on Friday, according to the State Bank of Pakistan (SBP) data.

With the latest day-to-day drop, the rupee has devalued almost 9% (or Rs18.93) in the past six consecutive working days.

Market talk suggests the central bank has asked commercial banks to make import payments from their own inflows, while Bloomberg adds that traders are facing up to a week’s delay in making import payments that they used to make the same day after placing import orders.

On the other hand, the central bank reported that the global and local banks had normalised conditions for the Pakistani traders placing import orders, especially for the import of oil and gas.

“Since the staff-level agreement with the IMF, we have not received any complaint from banks or oil companies that they are facing difficulties in confirming LCs (letters of credit) for imports,” the SBP said on its official Twitter handle.

Experts said the rupee is paying the price of growing political uncertainty while the depleting foreign exchange reserves are not letting the currency stabilise and make the overdue partial recovery.

Published in The Express Tribune, July 26^th, 2022.

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