Dollar available for Rs304 with Pakistan's rupee reaching a new low
Last updated on: 30 August,2023 11:56 am
Local currency loses Rs7 in its value since August 22
KARACHI (Dunya News/Web Desk) – Pakistan rupee continues shattering records as it reached a new low against the US dollar during early trading on Wednesday, with the official exchange climbing to Rs304.
On Tuesday, the rupee had closed at Rs303.05, which means the local currency had declined by Rs0.95 so far in today’s session.
The latest series of setting new records had begun on August 22 with the rupee touching the 299 mark for the first time in Pakistan’s history, translating into a loss of Rs7 roughly since then.
It is the International Monetary Fund (IMF) conditions which are responsible for this slide because the deal reached with the world’s top lender makes it clear that there shouldn’t be any government/ central bank interventions and it is the market which would determine the exchange rate.
Read more: IMF condition dragging Pakistan rupee down the slope with no stop in sight
The IMF has made it mandatory for Pakistan to keep the difference between interbank and open market dollar exchange rates not more than 1.25 per cent.
Hence, a combination of guaranteed weaker rupee and the monetary tightening [higher interest rate] as suggested by the world’s top lender has paralysed Pakistan’s economy.
In simple words, the rise in open market price would automatically increase the official exchange rate. Thus, a Pandora’s box has been opened which is propelling the prices of all food and non-food items by making the imports expensive – including the rising cost of power generation. It’s a vicious circle.
However, the current state of affairs clearly raises serious questions about the stated objectives of and the policy set by the IMF to achieve these, as the results of pursuing the stringent guidelines have already produced devastating results.
Read more: Will govt now go for more fuel price hike to 'control' inflation?
If interest rate hikes are a must to control inflation, then how and why the prices of petroleum products as well as power and gas tariffs should be increased when everyone knows the policy is only fueling inflation.
In fact, the IMF in this way is incentivizing the dollar buying [hoarding] and smuggling – directly or indirectly – which is further complicating the problem for Pakistan.