Rupee remains on record-breaking spree

Depreciates to Rs301 to a dollar in inter-bank market

KARACHI:

Pakistani currency remained on a record-breaking spree for the fourth consecutive working day on Friday, hitting a new historic low at Rs301 against the US dollar, which came despite the government’s decision to take strict action against foreign currency smugglers.

According to the State Bank of Pakistan’s (SBP) data, the currency dropped by a fresh 0.26%, or Rs0.78, to Rs301/$, widening the cumulative loss in the value of the currency to over 4%, or Rs12.51, in the first 12 days of the caretaker government.

In the open market, however, the currency closed flat at Thursday’s record low of Rs314 against the greenback.

The difference between currency exchange rates in the two markets remained high at around 4.5%, or Rs13, which was significantly higher than the ceiling of 1.25% for any of the five consecutive sessions recommended by the International Monetary Fund (IMF).

Experts anticipated that the currency should stabilise around Rs300/$ ahead of the expected arrival of multilateral financing in the near future.

They, however, said that it seemed difficult the currency would make any significant recovery amid high demand for US dollars in the economy.

They pointed out that people were engaging in panic buying of the US dollar to avoid the impact of rupee devaluation, fuelling dollarisation of the economy.

llegal flight of capital abroad and strengthening of the illicit Hawala and Hundi market have played a leading role in pulling the rupee value down to the historic lows.

Besides, the reopening of imports, resumption of payments to international airlines for their services in Pakistan and gradual restart of profit and dividend repatriation by foreign direct investors to their headquarters abroad have continued to pile pressure on the rupee.

On Thursday, the interim government came up with a strategy to crack down on the unauthorised foreign exchange
dealers to arrest the dollar’s rise in the open market.

In a preliminary meeting on the skyrocketing dollar price, interim Finance Minister Dr Shamshad Akhtar asked for a
clear action plan to deal with the smuggling of dollars that was said to be one of the reasons behind the surge in its price.

The decision to crack down on the dealers was taken the day the rupee-dollar parity in inter-bank trade crossed Rs300, a threshold breached for the first time in Pakistan’s history on the back of high dollar demand because of imports, dollarisation of the economy, smuggling and financing of Afghanistan’s imports.

Officials of the SBP, Ministry of Finance, Federal Investigation Agency and Intelligence and Investigation (I&I) Customs as well as officers of intelligence agencies participated in the joint working group meeting, according to officials privy to the discussions.

Gold up

The rupee devaluation on Friday forced the gold pricing body to increase the commodity’s price by Rs2,900 to Rs235,500 per tola (11.66 grams).

The increase in the precious metal’s price came partially in the wake of an uptick of $4 to $1,919 per ounce (31.10 grams) in the international market.