Dollar hits all-time high and rises to Rs204 in interbank trade – Business
The US dollar hit an all-time high of 204 rupees against the local currency in the interbank market on Monday, with analysts attributing the rupee’s decline mainly to pending oil-related payments and lower foreign exchange reserves.
According to the Forex Association of Pakistan (FAP), the rupee depreciated sharply from 1.85 to an all-time low against the dollar since last week’s close at 202.35 rupees.
Meanwhile, on the open market, the greenback was trading at Rs206.
Malik Bostan, who heads the FAP, linked the rise in the value of the dollar to the payment of oil import bills. He said the rupiah will remain under pressure until the deal with the International Monetary Fund (IMF) is finalized.
“The targets set for imports and exports in the next fiscal year show a huge gap, which shows that also next year the market will have to acquire loans,” Bostan continued, adding that “speculation” was also on the rise.
He suggested that the government impose a ban on dollar futures trading to stabilize the rupee.
Zafar Paracha, general secretary of the Association of Exchange Companies of Pakistan, attributed the rise in the dollar to foreign companies that withdrew their profits from the country.
“Exporters are also not bringing foreign currency into the country so that they can earn excess profits, which has created a gap between supply and demand for dollars,” he said.
Parsha further pointed out that the State Bank of Pakistan (SBP) should ask exporters to bring their earnings back into the country so that the supply of dollars will increase.
Meanwhile, Asad Rizvi, former treasury chief at Chase Manhattan Bank, Told Mettis Global – a web portal of financial data and analysis – that even if the budget had been presented, “the fate of the PKR movement will depend on the FATF (Financial Action Task Force) and incoming news from the IMF”.
The latest episode of the rupiah’s decline against the dollar began in June, with the greenback ending the local currency’s five-day winning streak.
According to data released by the SBP, the rupee started appreciating against the US dollar on May 27 and has continued to appreciate for five consecutive sessions. This was after the greenback continued to rise due to the country’s increased imports, dwindling foreign exchange reserves and uncertainty surrounding the IMF’s $6 billion facility, which has since stalled. april.
On May 19, the dollar hit a peak of 200 rupees for the first time, and respite for the rupee only came after the government raised oil prices by a whopping 30 rupees per litre, opening the way to the release of a billion dollars. tranche of the International Monetary Fund. Subsequently, the greenback lost Rs2.25 in a single session to fall to Rs199.76 on May 27.
The recovery of the dollar had started on June 3. It was described as temporary by traders, who attributed it to oil price shocks which would increase inflation.
They said Dawn that they expected inflows from the IMF and that China would once again support the local currency.
Finance Minister Miftah Ismail had also expressed hope for an agreement with the IMF and the renewal of a $2.3 billion Chinese loan that would improve the country’s foreign exchange reserves.
The SBP’s foreign exchange reserves fell by $497 million to $9.2 billion in the week ended June 3.
The SBP reported that the country’s total foreign exchange reserves fell to $15.176 billion while commercial bank holdings were $5.950 billion during the week.