The rupee experienced a significant decline of Rs2.78 against the US dollar in Tuesday’s interbank trade. As the Exchange Companies Association of Pakistan reported, the local currency stood at Rs291.27 in the afternoon, dropping from its prior rate of Rs288.49. Meanwhile, in the open market, the dollar hit a value of Rs300.
Currency expert Zafar Paracha highlighted this depreciation as an “expected” event, mentioning the ongoing upward trend in the open market and how it influenced the interbank rates.
Factors Influencing the Current Currency Trend
The recent agreement with the International Monetary Fund (IMF) stipulated a mere 1% difference between the open market and interbank rates. Paracha emphasized the influence of the caretaker setup on the dollar’s rate, indicating that outgoing governments often defer challenging decisions to their predecessors due to the absence of a “political stake”.
Despite his belief in the country’s solid financial credentials, Paracha expressed concerns over conflicting government policies, emphasizing the need for structural reforms. Interestingly, over the weekend, the US dollar reached Rs302 in the open market, surpassing the 1 to 1.5% difference range set by the IMF under a recent $3 billion arrangement.
