The US dollar continued its growth against the rupee on Tuesday, rising sharply to R199 in trade between banks and marking the end of a record-breaking weekend, largely due to rising inflation and closing foreign reserves.
According to the Pakistan Forex Association (FAP), the greenback gained Rs2.75 from the previous day closing Rs196.50 and climbed to Rs199.25 about 1:30 pm before closing at Rs199, a profit of Rs2.50.
In the open market, the US currency was trading at R200.50 around 4pm.
The current dollar dollar continued to rise 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, up from R194 on Monday and up from R196 yesterday (Tuesday).
While FAP data showed that the greenback closed Rs196.50 on Tuesday, a It was morning The report quoted the Pakistani State Bank as a closing rate of Rs195.74 – a figure indicating that the US currency was closing the Rs200 psychological barrier.
Another It was morning The report stressed Tuesday that while the dollar retains a rupee in its strong clutch for the entire FY22 financial year, the last two months proved to be the worst.
Asad Rizvi, former head of the Manhattan Bank treasury, said Mettis Global Tuesday that “even the constant influx of recordings does not help” in containing a dollar plane.
“Reducing forex reserves, delays in entry and the calmness of the Bank of Pakistan gives jitters to the market. But rising oil prices beyond $ 110 is a disaster,” he said. Mettis Global The report quoted him as saying.
Who will be affected by the greenback flight?
With the rise of the dollar to unrecognized high levels, stakeholders warn that a weaker rupee could open up Pakistan to the second round of inflationary impact, which will hit the lowest and middle levels the hardest.
Experts believe that while no economic sector can be protected from the collapse of the rupeee, key areas such as debt supply and imports of food and food will be among the first to be affected.
Topline Securities CEO Mohammad Sohail said It was morning Tuesday if the average person is always indirectly affected by the fall of the rupee.
“A weaker rupee means higher imports of goods that increase inflation, which affects the low and the middle rather than the middle or very rich,” he said.
In addition, the valued dollar raises production costs, which will have a negative impact on domestic product competition in the international market.
According to Lucky Motor Corporation Limited Chief Executive Officer Asif Rizvi, rising dollar prices will lead to higher vehicle prices and therefore, car sales will be significantly affected in the future.
Vehicle sales figures have shown positive growth, but “new bookings are expected to fall sharply after rising interest rates and rising vehicle prices,” he said, adding that car financing could reach zero in the coming months.
Meanwhile, Chairman of the Association of Builders and Developers Mohsin Sheikhani said a sharp fall in the price of rupee has sent building materials prices up to alarming levels, rising house construction costs to 5,500-6,000 per sq ft from Rs. 3,000 three years ago.
The reason for the increase in the dollar
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 petrol and electricity subsidies – a requirement for the introduction of the International Monetary Fund (IMF) loan program – has also eroded stakeholder confidence.
At the same time, the decline of the rupee is also influenced by the uncontrolled increase in imports combined with the slower growth rate of exports.
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.
According to FAP Chairman Malik Bostan, another reason for the continued rise in the value of the dollar is its sales.
“Commercial banks are always facing the dollar in the interbank market, which is why they cost R1-2 every day,” he said in an interview. Parhlo.com.
Steps to catch a rupee fall
In light of this, Prime Minister Shehbaz has instructed policymakers to devise a comprehensive plan in consultation with stakeholders to halt the rupee-fall and improve resources.
He has held meetings with Bostan on the matter, and referring to the meeting on Tuesday, the FAP chairman said. Parhlo.com to ask the PM to take action on commercial banks in order to end the steady rise in the value of the dollar.
Bostan added that he had advised the prime minister to immediately ban the ongoing trade of the dollar and 100pc of cash on all exports.
Setting a monetary policy, he explained, will lead to a decrease in exports and will in turn reduce the pressure on the rupee.
Meanwhile, FAP general secretary Zafar Paracha said the rupee had a chance to quickly recover if there were “good results” negotiations with the IMF in Doha and an international lender released a $ 1 billion tranche, which has been delayed. after the interruption. of the IMF program with Pakistan in April.
Otherwise, he added, the dollar could break the Rs200 mark.
With a view to ending the rupee fall, the government held several meetings on the issue last week and It was morning The report said on Tuesday that this was showing growing frustration in Islamabad power corridors.
Lots to follow
