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- Rupee trades at Rs314 against dollar in open market.
- The local currency loses Rs0.78 on Friday.
- It closed at 300.22 against greenback yesterday.
KARACHI: The Pakistani rupee ended the week on a negative note at a record closing low of 301 against the US dollar in the interbank market, data from the State Bank of Pakistan (SBP) showed.
The local currency is at an all-time low following an easing in import restrictions that has increased the greenback’s demand and rising risks associated with financing the country’s current account deficit.
According to the Exchange Companies Association of Pakistan (ECAP), the local unit is trading at Rs314 in the open market taking the difference between the interbank and kerb rates to Rs13.
According to data issued by the central bank, the local unit lost Rs0.78 or 0.26%, down from yesterday’s (Thursday) close of 300.22.
The rupee has lost Rs12.51 in the interbank market since the formation of the caretaker government which is tasked with overseeing at least one review of the International Monetary Fund (IMF) $3 billion standby arrangement; and steering the country through to a national election that is in theory due to take place by November.
Economic expert and former adviser to finance minister Dr Khaqan Najeeb told Geo.tv that pressure from the release of already parked containers and dropping exports and remittances are causing a dollar liquidity crunch in the economy.
The interbank market, he said, is also trying to catch up with the kerb market as Pakistan has agreed to a structural benchmark with the International Monetary Fund of keeping the two markets with a difference which can not be more the 1.25% on the average in five days.
“The open markets are also supply constrained but the demand stays high because the part of imports that are not fulfilled by the interbank market are also taken care of at the kerb market and because of the dollarisation because many people tend to feel that dollar is a storer value and best to hold.”
The expert also pointed out that the monetary policy has fallen behind in creating an impact on people wanting to hold the rupee as well.
He added that inflows have to increase at the interbank level which is the best way to ensure that the Pakistan rupee tends to stabilise
“Also the certainty on the economic plan and the future planned inflows will also help as the next tranche may not be due in the coming months,” he said.
—Additional input from Reuters.
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