Dollar up Rs1.28 as uncertainty hits rupee

Dollar up Rs1.28 as uncertainty hits rupee


Greenback has far made a net gain of Rs5.92 after dropping to Rs276.83 on Oct 16

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KARACHI (Dunya News/Web Desk) – The US dollar climbed by Rs1.28 to Rs282.75 in interbank trading by midday on Wednesday amid fears of market manipulation as buying pressure continues propelling the world’s dominant safe haven currency.

Similarly, the dollar was up by 50 paisa in open market and being traded for Rs283 in continuation of the trend since Oct 16 when the greenback had depreciated to Rs276.83 in official exchange rate as a result of a weeks-long rupee.

Earlier, the Pakistan rupee had nosedived to Rs307.10 in interbank trading and to Rs332 in open market before the government launched a crackdown on currency manipulation through hoarding, smuggling or illegal trading – hawala and hundi.

It means the dollar has so far made a net gain of Rs5.92 after registering a 0.07 per cent, or 20 paisa, upward movement on Oct 17 in official exchange rate.

The latest gains come after the State Bank of Pakistan’s Monetary Policy Committee on Monday decided to maintain the interest rates to the current record-high level of 22pc despite the signs of an easing inflation, making many in the market to expect a rate cut.

Read more: Finance ministry report notes draining effects of high interest rates on govt resources

However, the central bank decided against showing a flexible approach as the International Monetary Fund (IMF) is advocating monetary tightening while the top central banks like the US Federal Reserve and the European Central Bank have been clear that the low rates aren’t possible in near future.

Another factor resulting in buying pressure is the arrival of an IMF team in Islamabad tomorrow (Thursday) for the first of the two reviews under the current $3 billion agreement which will expire on March 31 next year.

The success of the IMF review will result in the release of $710 million in the second tranche with the caretaker government confident of impressing the world’s top lender, especially after hiking the gas prices, which will help deal with the ballooning circular debt.