KARACHI (Dunya News/Web Desk) – The US dollar is seemingly able to successfully stop the rupee surge as it started the new business week with another 43 paisa gain after being traded for Rs281 in the ongoing interbank trading on Monday.
At one point, the dollar exchange rate was up 68 paisa, increasing the rate to Rs281.25. However, the rupee managed to recover some of the losses by the time this report was filed around 12:50pm.
It means the greenback has appreciated by Rs4.17 since Oct 16 when the official exchange rate was recorded at Rs276.83 after the rupee bounced back from a record low of Rs307.10 in a weeks-long upward movement.
On Oct 27, the last trading session of the previous working week, the dollar had closed at Rs280.57 as the currency market is again witnessing buying pressure.
As far as the open market is concerned, the rupee depreciated by another Rs1 with the dollar exchange rate reaching Rs282.50.
Meanwhile, the central bank’s Monetary Policy Committee (MCP) is meeting later in the day to decide about the interest rates for the next two months.
Record-high inflation and interest rates are among the factors that accelerated the rupee depreciation as they crippled economic activity, encouraging the people to invest in safe-haven dollar and gold.
If the State Bank of Pakistan goes for a rate cut, as suggested by some experts, it will certainly boost the economy and discourage the trend of hoarding the US dollar.
As the rupee had recovered thanks to a crackdown on market manipulators, some circles are again attributing the latest series of depreciation to profiteering with the currency hoarders taking advantage of the political and economic uncertainty due to the Middle East situation.
The US dollar along with the Japanese yen and the Swiss franc are considered safe haven currencies. However, the greenback has been performing well in global money markets.
But one has to keep it mind that the rupee’s appreciation since late Sept came at a time when other currencies were not performing well against the dollar, proving the fact that the local nosedived manly due to the factors like hoarding and cross-border smuggling.
At the same time, an International Monetary Fund (IMF) team is scheduled to reach Islamabad on later this week for the first of the two reviews of $3 billion standby arrangement – a nine-month deal signed by Pakistan which will expire on March 31.
The IMF has strict conditions – ranging from increase in energy prices to the privatisation of loss-making state-owned enterprises – which must be met to ensure release of the second tranche.