The rupee continued to lose its value against the greenback on Tuesday, falling to Rs227.88 against the US dollar in the interbank market.
The domestic currency has cumulatively lost 4.42% (Rs10.09) of its value in the last three months, compared to Rs217.79 in early October.
The fresh drop came after the government failed to make any headway in its talks with the International Monetary Fund (IMF) for the revival of its stalled $6.5bn loan programme.
With the IMF programme still halted, the country’s foreign exchange reserves have depleted to $4.56bn – hardly enough to provide a 25-day import cover to the country.
The dwindling foreign exchange reserves have forced the government to curb imports, badly impacting economic activities in the country. A number of industrial units have either closed partially or completely amid non-availability of imported raw materials.
Moreover, the country’s foreign debt obligations for the next six months stand at $13bn, sparking concerns about Pakistan defaulting on them. Therefore, the resumption of the IMF programme is the only lifeline for the nation to avert default.
Financial experts said that the interbank exchange rate of Rs227.88 was not the real value of the rupee. Instead, the US dollar was available in the black market for as high as Rs270. Finance Minister Ishaq Dar has tried to artificially control the rupee value in the interbank market, which was also one of the leading reasons behind the delay in the resumption of the IMF programme. The lending institution has asked government to let market forces (commercial banks) determine the rupee-dollar parity.
On the other hand, the local gold prices dropped by Rs3300 to Rs181,800 per tola, according the All-Pakistan Sarafa Gems and Jewellers Association (APSFJA).
This was despite the fact that international gold prices had seen an increase of $5 per ounce to touch $1,876 in the same day.
Experts said the price of gold may stabilise around the current price.
The drop in the local market, against an increase in the international market, suggests that the demand for the commodity had dropped in the domestic market, they added.
Published in The Express Tribune, January 11th, 2023.
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