Dollar breaches Rs189 as IMF facility stalled, political turmoil persists
The US dollar continued its surge against the rupee on Thursday, breaching the Rs189 barrier in the interbank trade, a trend that is largely attributed to the stalling of an International Monetary Fund (IMF) loan facility as well as rising imports.
According to the Forex Association of Pakistan (FAP), the greenback appreciated by Rs3 over Wednesday’s close of Rs186.13 to reach a new high of Rs189.25 in the interbank market today.
Earlier on Wednesday, the dollar had closed 90 paisa up from Tuesday’s Rs185.23.
The dollar was being quoted at Rs189.02 in interbank at 1:18pm.
Meanwhile, the currency’s selling price was recorded at Rs188.70 and buying rate at Rs188.20 in the open market at 12:35pm.
Expressing concern over the persistent rise in the greenback’s value, FAP Chairperson Malik Bostan stressed the need for the Supreme Court to issue a ruling on the ongoing political situation promptly so as to end the political uncertainty that had gripped the country.
Last week, the dismissal of a no-trust motion against Prime Minister Imran Khan by National Assembly (NA) Deputy Speaker Qasim Suri had led to the dissolution of a the NA by President Dr Arif Alvi on the premier’s advice.
The apex court has taken suo motu notice of the matter and is expected to issue a ruling on the legality of these measures soon.
Following these developments, the IMF said on Monday that while there was “no concept of suspensions” within its programmes, it would engage further with Pakistan “once a new government is formed” in the country.
Exchange Companies Association of Pakistan General Secretary Zafar Paracha identified this “deadlock” in engagements with the IMF as one of the reasons behind the rupee’s continuous decline against the dollar.
He further said that rising imports was also increasing pressure on the rupee, leading to a surge in the value of dollar.
According to Bostan, rising imports and the consequent growing trade deficit could keep the rupee under pressure in the future as well.
He further said a “persistent rise in the value of dollar is damaging the economy,” adding that the trend had led to an increase of Rs1 trillion in foreign debt.
Meanwhile, Paracha called for intervention from the State Bank of Pakistan (SBP) to control the dollar’s rising rate and action against banks involved in “satta bazi” (manipulation of the dollar’s value).
Traders and industrialists, for their part, say the free float exchange rate idea is not working, and they have also been appealing to the SBP to play its role in bringing stability as the exchange rate volatility is posing a serious threat to the economy.
For its part, the central bank remains silent over the current exchange rate situation, while the government has been arguing that it was due to higher demand for dollars from the importers.