After August 16, dollar has gained Rs15.10 in the interbank.
US dollar continues upward trajectory against PKR in interbank. The US dollar continued its flight against the Pakistani rupee for the sixth consecutive session in interbank trading on Friday.
After gaining Rs4.8 in interbank, the US dollar was trading at Rs229.50 at the start of the business session.
While after August 16, dollar has gained Rs15.10 in the interbank.
It is pertinent to mention here that the State Bank of Pakistan confirmed that Pakistan has received a loan tranche of US$1.16 billion from the IMF.
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Pakistan’s currency has cumulatively fallen by 9.21 or 4.2% against the greenback since this week’s trade began and is seemingly on the same pattern that was witnessed two months back — when the local unit hit 239.37 on July 28.
Currency dealers have said the pressure on the rupee is due to a shortage of dollars in the market as there is a higher demand for the greenback after the government scrapped the ban imposed on the import of luxury goods.
They also noted that like the rise in imports, remittances and exports did not increase to the required amount, thus, causing a disruption in the supply-demand position of the dollar.
Apart from these, the dollar’s strengthening globally is also leading to the greenback’s appreciation against the rupee. The US dollar, which compares the value of the dollar to six important rival currencies, increased 0.04% to 109.73 after peaking at 110.79 on Wednesday — a level not seen since June 2002.
Other factors causing the rupee’s depreciation include political unpredictability, decline in investor confidence in the economy, higher foreign exchange requirements (due to flood-related expenses, a backlog of letters of credit payments, and increased Afghan trade), and slower inflows.
The cost of damage and devastation caused by the floods across Pakistan has surpassed the International Monetary Fund’s (IMF) loan disbursement.
Initial estimates place the economic damage caused by the severe floods in Pakistan at a staggering $10 to $12.5 billion, this is amidst a time when the government also intends to drastically reduce the Public Sector Development Programme (PSDP).
Analysts said that the resumption of the IMF loan programme did allay concerns about a scenario that would have been difficult to handle in the near future, and gave rise to hopes of unlocking money from other multilateral lenders and friendly countries.
The greatest floods, which have hit the economy in decades, are likely to cause a slowdown in economic growth. The widespread deluge has damaged standing cotton and rice harvests, which would also reduce the country’s exports and widen the current account deficit.
Country-wide destruction has also necessitated the urgency for rescue and relief, for which the government has been purchasing more essentials.
“The rupee has recovered after the State Bank of Pakistan withdrew its decision to allow the exchange companies to export US dollars to the international market,” a currency dealer told media.