KARACHI: The US dollar rose increased by Rs5.2 to hit Rs162 in interbank trade on Wednesday at the close of the day’s trading.
Similarly, a massive increase in the value of gold has also been witnessed during this week, with the yellow metal trading at Rs80,500 per 12 grams on Wednesday.
The free-fall of the rupee has been the result of the latest International Monetary Fund (IMF) agreement which agreed to disburse a $6 billion loan to cash-strapped Pakistan with a condition for ‘market-determined’ exchange rate.
Bearing in mind the freshly agreed deal with the International Monetary fund (IMF), further depreciation was expected in the markets as it is a condition for the agreement.
Adnan Sheikh, Pakistan Kuwait Investment Company’s Assistant Vice President (Research), while talking to Profit about rupee devaluation said, “The rupee is likely to fall to Rs175-Rs180 levels by the end of this year”.
He added, “Rupee’s depreciation is inevitable, it will fall in value, sooner than later. The demand for [the] dollar has to rise for repayments and we do not have enough reserves, hence the need to buy dollars.”
Meanwhile, Pakistan Muslim League-Nawaz (PML-N) Vice President Maryam Nawaz lamented the recent surge in the dollar value and said that the “economy at [on] the verge of total collapse”.
Dollar soars to Rs.160.5 interbank.
Pak economy at the verge of total collapse.
Damage caused by Naalaiq-e-Azam will be irreparable.
— Maryam Nawaz Sharif (@MaryamNSharif) June 26, 2019
Last week, State Bank of Pakistan Governor Reza Baqir had provided assurances that the central bank was ready to intervene in the market in case of excess volatility. Baqir explained that the government had adopted a market-based exchange rate instead of a free float or fixed exchange rate, as neither were appropriate at this time.
“In the market-based system, you consider supply and demand factors, what side they are pulling the exchange rate, and you don’t suppress them. And this is fundamental ─ we keep a close eye on the market, and if there is excessive volatility […] or special pressures, the SBP intervenes. And we will continue to do so to make sure that there isn’t excessive volatility or ‘disorderly market conditions’, as economists say,” Baqir had said.