The Pakistani rupee witnessed a downturn of 1.6% against the US dollar in the open market on Monday, contradicting the uptick observed at the end of the previous week.
The Forex Association of Pakistan reports the dollar traded at Rs305 at midday, marking an Rs5 increase from Friday’s close.
This shift has been attributed to a scarcity of dollars in the open market, with market players hoarding foreign currency in anticipation of further rupee depreciation.
Zafar Paracha, General Secretary of the Exchange Companies Association of Pakistan, noted that individuals who acquired the currency at rates up to Rs310 are refraining from selling, opting instead for a wait-and-see approach.
Paracha claimed that the current central bank policy allowing banks to source dollars from the interbank market for settling cross-border card-based transactions should have reduced prices by Rs10 to Rs20. Although this strategy resulted in an Rs15 appreciation of the rupee the following day, the currency declined by Rs5 today.
Paracha suggested properly implementing the State Bank of Pakistan’s guidelines could help narrow the dollar rate gap in the interbank and open markets. He also emphasized the importance of aligning government policies related to foreign exchange markets to avoid conflicts and obtain desired outcomes.
Despite these shifts, the interbank market remained relatively stable, with the dollar trading at Rs286.32 at midday, compared to Friday’s close of Rs285.68.
