Pak rupee open market rate up Rs3 as local currency can't cope with 'pricing mechanism'

IMF conditions acting as push factor

KARACHI (Web Desk) – The troubled relationship between the Pakistan rupee and the US dollar continues worsening as the local shed another Rs3 against greenback in open market where it was being traded for Rs315 by midday on Wednesday.

The latest losses mean that the official exchange would also increase as the demand is pulling the rupee down just a day after it slid to the record-low level in interbank trading.

Previously, it was earlier this year on May 11 when the dollar had fetched Rs298.93 in official exchange rate.

Tuesday had also seen rupee performing even worse in the open market with the dollar available for Rs312, representing a Rs8 loss during a single session.

The reason behind this depreciation is the easing in import restrictions that has lifted demand for the dollar after months of contraction which also ensured that Pakistan was able to ensure a huge reduction trade deficit during the last fiscal year.

But the equation isn’t that simple because the rupee is actually nosediving thanks to the condition set by the International Monetary Fund (IMF) as Pakistan needs to allow the market to determine the exchange rate. There can’t be any intervention to arrest the slide.

Read more: IMF condition dragging Pakistan rupee down the slope with no stop in sight

Interestingly, the Tuesday’s losses came on a day when the dollar was down against major currencies in global money markets with the greenback easing from recent 10-weak peaks as global risk appetite, hurt by a jump in US government bond yields and a weakening Chinese economy, staged a rebound.