The US dollar continued its run against the rupee for the sixth consecutive session on Tuesday to break the Rs196 mark – the highest time – in interbank trading, largely due to the depletion of foreign exchange reserves and imports.
According to the Pakistan Forex Association (FAP), the greenback earned Rs1.90 from the previous day closing of Rs194.60 a ride to Rs196.50 around 1:00 pm.
This signal of a steady rise in the dollar against the rupee began on Tuesday last week, when the international currency reached a record high of 188,66. It went up to R190.90 on Wednesday, up from R192 on Thursday, up to R193.10 on Friday and up more than R194 yesterday (Monday).
While FAP data showed that the greenback closed at Rs194.60 on Monday, the State Bank of Pakistan recorded a close rate of Rs194.18. A It was morning The report, while quoting the SBP closing rate, said that the international currency was trading at higher levels before it remained at R194.18.
I It was morning The report noted that while the dollar retains the rupees in its strong position throughout the FY22 financial year, the last two months have shown the worst.
Moreover, a Parhlo.com The report said on Monday that when the PML-N-led coalition government took office on April 11, the dollar was worth Rs182.3, and since then, the rupee has lost Rs11.4 or 6.2 percent of its value.
According to currency dealers, the demand for the dollar has never dropped, which has not allowed local currency to remain anywhere.
They say the high demand for dollars is the main reason for the bullish trend in the stock market. The political drag on the ruling government over the reversal of petroleum and electricity subsidies – a requirement for the introduction of the International Monetary Fund (IMF) loan program – has also eroded stakeholder confidence.
During this period, the decline of the rupee is also influenced by the uncontrolled increase in imports and the slow pace of export growth.
Rising oil prices have doubled oil import bills, but oil imports are generally on record. In April, imports increased by 72pc, leaving no room for the government to improve its foreign balance.
Furthermore, foreign exchange reserves have grossed $ 10.3 billion, the lowest since June 2020.
Currency brokers say the unexpected high bill and low foreign investment did not support the exchange rate while more than 13bn of the default account already exists as a challenge to the government.
The Exchange Companies Association of Pakistan has identified uncertainty over the release of $ 1 billion as another factor contributing to the depreciation of the rand.
He described the release of IMF funds as a “benchmark”, saying that if the Fund were to accept payments, other international institutions would gain confidence and follow through.
Vendors at the inter-bank have told It was morning on Monday if there is no opportunity to improve the exchange rate.
“The dollar is worth every day until the government takes concrete steps to prevent this for free,” said currency broker Artif Ahmed.
‘Strict standards’ are required to prevent the dollar from hitting R200 points
Amid a decline in foreign exchange reserves and a sharp decline in domestic currency, Prime Minister Shehbaz Sharif has instructed policymakers to devise a comprehensive plan in consultation with stakeholders to end the rupee collapse and improve reserves.
He also held a Zoom meeting with the chairman of the Exchange Companies Association of Pakistan (ECAP) Malik Bostan on Monday and expressed concern about the current situation.
Talking to Parhlo.com today, Bostan said “the results of yesterday’s meeting will be immediately visible on the market”.
He also stressed that in order to reduce the dollar flight and prevent it from reaching 200 points, “the government will have to take drastic measures”. In this regard, it has proposed restrictions on the export of goods that bind you to bring in revenue from exports.
Bostan said that if the government was able to control the exchange rate of the dollar in the interbank market, “we would immediately bring the value of the dollar to the open market”.
Prior to the meeting between PM Shehbaz and Bostan, Finance Minister Miftah Ismail discussed the exchange rate situation with the ECAP group.
During the meeting, it was suggested that markets across the country should be closed before sunset, which would save a significant amount of energy, reduce foreign oil bills and supply to the general public rather than recover.
In addition, representatives of the exchange companies have requested the closure of all exports except essential items.
“If a person feels that importation is necessary, he should prepare the dollars himself,” said Zafar Paracha, secretary-general of ECAP.
He spoke again to no Parhlo.com today, as he continues to call for “emergency economic coercion” and urge political parties to stay together to formulate a plan for economic stability.
He also called on the government to end its unnecessary expenditure on the “good and bad” of parliament, warning that if these measures are not taken, the situation in Pakistan could turn into a nightmare in Sri Lanka, now facing a difficult economy. problem.
According to a It was morning report, the PM would hold another meeting with Bostan and the SBP governor at the exchange rate today.
This will be the third meeting held by the government in four days and reflects growing frustration in the power corridors in Islamabad, the report said.