Rupee disparity grows amid political turmoil

According to ECP rupee dropped 0.04%, or Rs0.13, to Rs281.32/$ in open market

KARACHI:

The disparity in the value of the rupee between interbank and open markets widened to over Rs2 on Tuesday, compared to around Rs1.50 previously, signalling a potential return of currency volatility amid political turmoil.

The spread, however, stands at 0.72% (Rs2.01), remaining well below the International Monetary Fund’s recommended maximum level of 1.25%.

The rupee dropped 0.04%, or Rs0.13, to Rs281.32/$ in the open market on Tuesday, as per data from the Exchange Companies Association of Pakistan|. This decline is attributed to an uptick in demand for the greenback, notably for Hajj and Umrah.

Read Rupee dips slightly but largely stable

Conversely, in the interbank market, the currency remained stable at Rs279.31/$, up by 0.01% or Rs0.02 day-to-day, according to the SBP data. Previously, the disparity had widened to over Rs30-40 between the markets, causing significant volatility. However, efforts by the outgoing caretaker government, including crackdowns on currency smuggling, helped narrow the gap.

Published in The Express Tribune, February 14^th, 2024.

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