Dollar shows no mercy for Rupee in interbank trade

The US dollar has continued its upward trend in interbank trading and gained Rs1.82 against the local currency despite the government Staff Level Agreement with IMF and receiving of the first tranche of $1.166 billion from the international lender, reported 24NewsHD TV channel. 

In the initial trading, the American currency on Monday reached Rs230.80.

However,  the US dollar Monday closed at Rs229.82 after an increase of Rs1.64. 

Interbank closing #ExchangeRate for todayhttps://t.co/V2nogjMqcl pic.twitter.com/yjpZbT1Cqa

— SBP (@StateBank_Pak) September 12, 2022

Exchange Companies Association of Pakistan (Ecap) General Secretary Zafar Paracha noted several factors behind the decline of local currency including an expected increase in the import bill in the aftermath of the devastating floods.

Paracha said. “Our expectation that the rupee would gain Rs10-20 after IMF deposit was received did not happen. We received $1.16bn from the IMF which is not adequate.”

The country needed to make payments amounting to $40 billion in the current fiscal year, the Ecap general secretary noted.

He added that while the government previously said it had made arrangements to meet all financing needs, now it appeared its statements have changed.

The last week’s closing of the US dollar was Rs228.18. On last week’s Thursday, the dollar strengthened by Rs4 in two sessions. 

The sharp increase in the greenback prices despite the arrival of the $1.1bn from the IMF has threatened the government’s aim to calm down the vulnerable exchange rate.

However, the resumption of IMF loans did provide temporary respite as the rupee recovered first and then started losing against the greenback.

The State Bank of Pakistan said that during the week ending Sept 2 it received $1.166 billion from IMF.

“After accounting for external debt and other payments, the SBP reserves increased by $1.103bn to $8.799bn,” said the SBP.

Reporter Ashraf Khan