Karachi: The Pakistani rupee extended its losses on Thursday, sliding another Rs1.10 against the US dollar in the interbank market.
According to the Exchange Companies Association of Pakistan, the greenback was changing hands at Rs305.55 at 12:30pm. Yesterday, it closed at 304.45. The consistent devaluation of the rupee is not only causing inflation but is also compelling the central bank to raise interest rates to mitigate the repercussions of uncontrolled depreciation of the local currency, according to bankers who manage exchange rates and imports.
“The market is not in control of anyone. The steep devaluation will continue and even cross the limit given by the IMF,” a senior banker had said, adding that nobody knows what is next for the exchange rate.
“This fast deprecation of local currency is alarming for the government in charge. There must be some pause in the frequent free fall of the rupee,” Atif Ahmed, a currency dealer in the inter-bank market, had said.
Exchange Companies Association of Pakistan General Secretary Zafar Paracha said there were several reasons behind the increase in the dollar’s price.
“Firstly, we removed import restrictions on non-essential items [leading to an increase in the demand for the dollar]. Due to this, prices in the interbank rose,” he said.
“Secondly, the confidence of investors has been shaken [due to the economy],” he added.
“Thirdly, the additional restrictions that were placed on the buying and selling of dollars in November last year caused the grey market to grow rapidly.”
“After this, we capped the interbank and open market rates because of the IMF. They think that we control the interbank and open market rates. They don’t trust us.”
Paracha continued: “Another reason for the increase in dollar price was due to the excellent illegal foreign exchange business flourishing in the country”. –Agencies
