Pakistani rupee’s slaying by US dollar continues in interbank trading

After the removal of ‘unannounced peg’ on the US dollar rate, the slaying of Pakistani currency in the interbank trading becomes all the more evident as the local unit was declined by Rs7.17 in the interbank trading on Friday, reported 24NewsHD TV channel.

According to the foreign currency dealers, the US dollar thumped Pakistani rupee during the morning trading session and started trading by jumping to Rs262.60, up by Rs7.17.

Within two days, the rupee has lost Rs31.39 of its value to the greenback in the interbank market which is likely to increase Pakistan's foreign debts by over Rs3,200 billion.

Interbank closing #ExchangeRate for todayhttps://t.co/ypqbKr5xot pic.twitter.com/eKUgXjr1Pf

— SBP (@StateBank_Pak) January 27, 2023

The same was the case in open market, where the US dollar went up sharply on Friday registering a healthy increase of three rupees and was currently being traded at Rs265.

Experts believe the latest depreciation in rupee's value will trigger another storm of inflation in the country.

Yesterday, the local currency witnessed a bloodbath as it was depreciated by a massive Rs24.54 against the US dollar as the currency settled the day's trade at PKR 255.43 per USD. The situation in the open market was no different, with the Pakistani rupee being traded at 258/262 per USD.

Interbank closing #ExchangeRate for todayhttps://t.co/8oc0zHCyvM pic.twitter.com/eBX6rw3FIF

— SBP (@StateBank_Pak) January 26, 2023

The market-based exchange rate with no direct or indirect intervention was one of the main conditions to complete the 9th review of the International Monetary Fund (IMF) programme to unlock $1.2 billion.

The government has in fact given in to the IMF to accept its conditions for the revival of the loan programme as country’s forex exchange reserves have dwindled to nine-year low of $3.678 billion during the week ended on Jan 20. The reserves are not enough to cover imports for three months. 

Total liquid foreign #reserves held by the country stood at US$ 9.45 billion as of January 20, 2023.
For details https://t.co/WpSgomnKT3 pic.twitter.com/Geu5e95jcX

— SBP (@StateBank_Pak) January 26, 2023

Economic experts are of the view that the situation will improve once the IMF releases its stalled tranche. The Fund’s representative in Pakistan confirmed on Thursday that an IMF delegation would be visiting Pakistan soon to hash out the details of the stalled ninth Extended Fund Facility review.

"At the request of the authorities, an in-person Fund mission is scheduled to visit Islamabad January 31–February 9 to continue the discussions under the ninth EFF review," IMF Resident Representative in Pakistan Esther Pérez Ruiz was quoted as saying.

During a virtual talk with IMF officials on Tuesday, Finance Minister Ishaq Dar assured them that Pakistan would comply with all conditions for the revival of the ninth review.

Reporter Ashraf Khan