The US dollar climbed above Rs193 in the interbank market on Friday morning, reaching a new all-time high and breaking its previous day’s record which breached the Rs192 mark.
It closed at Rs193, rising by a rupee from the previous day’s close of Rs192.
According to the Forex Association of Pakistan (FAP), the day’s start saw the greenback appreciating by Rs1.10 from the previous day’s close and reaching Rs193.10 around 11am in the interbank trade.
Today is the fourth consecutive day that the dollar has risen to a record high against the rupee, with the international currency hitting a high of Rs188.66 in the interbank market on Tuesday, then soaring to Rs190.90 on Wednesday and rising past Rs192 on Thursday.
Alpha Beta Core Chief Executive Officer Khurram Schehzad told Dawn.com it was expected that the value of dollar would rise further today, linking the development to the expected strengthening of the greenback in the international market and an increase in interest rates in the US.
“Moreover, our macros are weak and the IMF (International Monetary Fund) is also not on board,” he added, referring to the uncertainty surrounding a deal with the international moneylender and a delay in the release of a $1 billion tranche by it.
In light of these reasons, Schehzad explained, the currency market was down and the rupee continuing to lose ground against the dollar was expected.
This freefall of the rupee against the dollar has also been attributed to the country’s high import bill.
Meanwhile, Mettis Global — a web-based financial data and analytics portal — has attributed the dollar’s upward trajectory to the ongoing economic crisis in the country, particularly melting foreign exchange reserves and political uncertainty.
It comes as foreign exchange reserves of the State Bank of Pakistan declined by $190 million to $10.308 billion during the week ended on May 6, the central bank said on Thursday. The overall reserves of the country also dipped to $16.375bn while the holdings of the commercial banks were $6.067bn during the week.
‘Storm of inflation’ feared
Exchange Companies Association of Pakistan General Secretary Zafar Paracha has painted a bleak outlook in case the value of the dollar continues to increase and called for imposing an “economic emergency”.
He said the dollar had been reaching a new high every day, noting that it was being traded at approximately Rs193 in the interbank market today, for nearly Rs195 in the open market and around Rs200 in the “grey market”.
“We call [on authorities] every day on the media to manage this country but we don’t see any government,” he said and warned that a persistent increase in the value of the dollar would lead to a “storm of inflation” of “unimaginable” intensity.
Giving the example of Sri Lanka, the island nation that has been facing a severe economic crisis, he said it was “very small a trailer” and the situation in Pakistan could be worse. “There (Sri Lanka) the population is only 25 million and here, we have a population of 250m, with people having weapons in abundance.”
Moreover, he said Pakistan also did not have good relations with most of its neighbours and a further rise in inflation could lead to a “security situation”.
Paracha urged the judiciary and relevant quarters to bring together political parties to make decisions in the interest of the country and nation.
Pointing out that the country’s foreign exchange reserves had declined significantly, he said, “We only have funds to make imports for one to two months.”
Paracha also called on the government to restrict unnecessary expenditure, including the use of non-development funds and perks, and placing a cap on the import of non-essential items.
Malik Bostan, chairman of the FAP, also suggested restricting the import of non-essential goods to prevent the dollar from rising further.
Speaking to Dawn.com, he further recommended limiting the use of petroleum products to keep foreign exchange reserves stable. “The unnecessary use of diesel for running big vehicles should be stopped a further increase in our oil consumption, which has risen by more than 30 per cent, can be prevented.”
He also suggested that political parties may together devise a “charter of economy” to stabilise the rupee.
Politicians spar on rupee’s devaluation
Meanwhile, PTI chief Imran Khan said the current economic situation, including the devaluation of rupee, “reflects lowest ever confidence in [the] imported government”.
“Market awaiting policy and action, which [the] imported government has failed to provide. Both myself and Shaukat Tarin had warned the ‘Neutrals’ that if conspiracy succeeded, our fragile economic recovery would go into a tailspin. That is what has now happened.”
On the other hand, Information Minister Marriyum Aurangzeb blamed Imran for the dollar’s flight in a series of tweets.
“Imran Khan has mired Pakistan in a difficult situation. The dollar has reached Rs193 because of Imran Khan. Incompetent, ineligible [rulers], cartels and the Imran mafia that was imposed [on the country] for four years committed economic terrorism against the nation,” she alleged.
Aurangzeb further said the Imran-led government had finalised the deal with the IMF and people were now facing its consequences in the shape of inflation. “He is responsible for the current economic instability in the country.
“Today, if difficult decisions have to be made, Imran Khan is responsible for it,” she added. “Imran sahib, putting the country’s economy and the nation at stake to save your politics is tantamount to treason … Imran sahib, stopped making a hue and cry and answer [the nation] on inflation.”