Rupee plummets by Rs3.02 against the US dollar to 291.51

KARACHI: Pakistani rupee plummeted against the US dollar for the third straight session by Rs3.02 (-1.04 percent) in the interbank market on Tuesday.
The State Bank of Pakistan (SBP) said in a tweet that the rupee opened at 288.49 against the dollar in the interbank market and closed at 291.51. The rupee depreciated by Rs1.52 (-0.53 percent) against the US dollar last week on a week-on-week basis.
During the current fiscal year 2023-24, Pakistani rupee has shed Rs5.52 against the US dollar in the interbank market, while it plummeted by Rs64.08 against the greenback in the current year.
Similarly, the local unit depreciated against the greenback in the open market by Rs3 (-1.01 percent). The rupee was quoted in the range of 298-301 against the dollar in the open market as compared to 295-298 a session earlier. In the black market/Hundi, the dollar was traded at Rs315 against Rs312.
According to currency dealers,the rupee’s depreciation was expected, as under the agreement with the International Monetary Fund (IMF), the difference between the open market and the interbank market should be 1 percent. They said that the open market was witnessing an upward trend, adding that this also had an effect on the interbank market.
They said that the caretaker set-up also had an effect on the dollar rate, as the outgoing government usually left difficult decisions to the former as it does not have a political stake. They expected that the rupee would remain under pressure, adding the government’s policies were in conflict with each other and called for undertaking structural reforms.
Under the $3 billion standby arrangement signed with the IMF in late June, the previous coalition government agreed to maintain a single currency rate in both interbank and open markets, with a slight difference of up to 1.5 percent increase in the open market’s value.
The decline in rupee’s value can be attributed to the removal of restrictions on letters of credit (LCs), which has led to an increased demand for dollars and subsequently weakened the rupee. Moreover, Pakistan’s dependence on imported oil makes it vulnerable to the constant rise of international oil prices in the past few weeks, which also affects the Pakistani rupee. – TLTP