Amid little availability of US dollars owing to liberalised demand, Pakistani currency slumped 1.5%, or Rs5, in a day to a new all-time low at Rs328 against the greenback in the open market, mounting pressure on inter-bank trade.
In inter-bank dealings, the rupee snapped its record-breaking downward streak after eight consecutive days of slide, stabilising at Rs305.47 against the greenback with a nominal recovery of 0.02%, or Rs0.08, according to the State Bank of Pakistan’s data released on Friday.
The drop in the open market widened the gap with the inter-bank market, with the difference increasing to 7.37%, or Rs22.53, at current parity. The International Monetary Fund (IMF) has recommended that Pakistan should keep the spread at a maximum of 1.25%, slightly over Rs4.
The high difference may force the inter-bank market to follow the trend prevailing in retail trade or vice versa.
Read Rupee at new low as losing streak continues
Forex Association of Pakistan President Malik Bostan said that growing demand for US dollars against limited supplies kept weakening the exchange rate in the open market.
He pointed out that a significant number of people were going to perform Umrah and Ziarat every day, which was why demand for foreign currencies including the greenback and Saudi riyal stood high, piling pressure on the rupee.
Exchange Companies Association of Pakistan (ECAP) General Secretary Zafar Paracha said that the grey market continued to offer a higher price for US dollars, attracting individual sellers to the illicit market and leaving almost no supplies for official exchange companies.
“The situation has caused the rupee’s slide in the open market,” he said and anticipated that the rupee-dollar exchange rate would remain volatile in the near term unless multilateral financing arrived.
“A correction in the exchange rate is overdue, instilling hope the rupee may recover Rs10-15 in the coming days,” he noted.
Published in The Express Tribune, September 2nd, 2023.
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