KARACHI: The Pakistani rupee continued its up and downward trend against the US dollar in the inter-bank on Thursday as the greenback touched an all-time high of Rs148.
The dollar gained Rs6.61 at the start of the trading in the inter-bank today, but soon was contained to 146 rupees.
Experts believe that the sudden devaluation of local currency against the US dollar and the greenback hitting an all-time high of Rs147 is interlinked with the government’s commitments to the IMF.
According to currency dealers, dollar was trading at Rs147 in the open market, whereas in the interbank market it remained stable around Rs147.
With this spike in the rate of US dollar, Pakistan’s foreign debt has increased by Rs580 billion with further rise in inflation being anticipated by analysts.
An exchange dealer explained another factor ‘the demand from Pakistanis planning to spend their vacations abroad after Eid holidays and during school vacations.’ Moreover, some buying has also been witnessed from travelers flying out for performing Umrah.
A few days ago, Prime Minister’s Adviser on Finance, Revenue and Economic Affairs Dr Abdul Hafeez Sheikh announced to have finalised a three-year bailout with the International Monetary Fund (IMF) for $6 billion.
The fall in the rupee’s value comes a day after Prime Minister (PM) Imran Khan set up a committee to control devaluation of the local currency and capital flight from Pakistan.
PM Khan presided over a high-level meeting with an ECAP delegation led by Sheikh Allaudin, Malik Bostan, and Mr Sheikh Mureed, director generals of the FIA and IB, the chairman of the Federal Bureau of Revenue (FBR) and the governor of the State Bank of Pakistan (SBP).
The meeting resolved that strict action will be taken against those responsible for deviating from the ‘actual’ exchange rates of currencies.
Currency rates agreed upon were: US dollar buying 143.50 and selling 144.00; Saudi riyal buying and selling at 38.20/38.35; and UAE dirham buying and selling 39.05/39.20.
According to officials, strict compliance has been insisted upon during the meeting. ECAP will not stand by any company diverging from these set rates and will not stand with the companies running dual sets of rates or avoiding receipting.
The president of exchange companies told Dunya News after the meeting that after government’s assurance, US dollar stabled at Rs144 in the open market. He said the forex companies have suggested lowering the limit of dollar export to foreign countries to 3,000 instead of 10,000. He said in this way the situation of supply and demand would be much better.
He added that the exchange companies would support government in stabilising the foreign currency.
On Tuesday, the rupee closed at Rs144 against the greenback, 0.20 percent weaker from the previous closing of Rs143.70.
Besides, the Pakistan Stock Exchange (PSX) benchmark KSE 100-share Index has dropped more than 600 points and plunged even below 34,000 points on Thursday.
Most of the currency dealers and experts have already expressed their disappointment over the undisclosed conditions agreed between the IMF authorities and the government.
Pakistan’s external debt and liabilities soared to an all-time high $106 billion as of May, reported the State Bank of Pakistan (SBP) on Thursday.
Since September 2018, $10 billion have been added to the total external debt of the country.
The external debt stood at $99,108 million in the fourth quarter of 2018 and it was $96,735 million in the third quarter of 2018.
Pakistan’s external debt averaged $56,337.99 million from the year 2002 until 2018, reaching $99,108 million in the fourth quarter of 2018 and a record low of $33,172 million in the third quarter of 2004.
According to Trading Economics global macro models and analysts expectations, the debt is likely to increase at 115,000.00 in 12 months.
In the long-term, the Pakistan Total External Debt is projected to trend around $123000.00 million in 2020, according to the econometric models.
The currency depreciation is expected to further increase the debt burden. IMF’s past reports noted that stress tests suggest that Pakistan’s external debt-to-GDP ratio would be affected by adverse shocks.
Meanwhile, taking notice of the devaluation of rupee against the US dollar, Prime Minister Imran Khan has ordered to launch crackdown against money changer companies selling dollar above market rate.
As per details, the premier chaired a special meeting to review sudden surge in the dollar’s value. The meeting also had a delegation of E-Commerce Association of Pakistan (ECAP) in presence.
On the occasion, ECAP delegates assured of not supporting companies selling foreign currency at higher rates.
They said the forum decided that companies deviating from set currency rates would not be given any concession.
It may be noted, just three days after the Prime Minister’s Adviser on Finance, Revenue and Economic Affairs Dr Abdul Hafeez Sheikh had announced to have finalised a three-year bailout with the International Monetary Fund (IMF) for $6 billion, the rupee went into free fall on Wednesday, hitting a record low of Rs146.25 against the dollar in the open market on Wednesday during trading and later bounced back to Rs144 at the closing of the trading.
The greenback was recorded an increase of Rs2.5 against the local currency to reach Rs146.25 in the open market. – NNI