Daily Times

The rupee continued to depreciate steeply in the interbank market on Friday, closing at Rs262.6 per dollar, down Rs7.17 or 2.73 per cent from yesterday’s close, according to the State Bank of Pakistan (SBP). The local currency’s value declined Rs24.54 to a record low of Rs255.43 in the interbank yesterday, the largest single-day depreciation in both absolute and percentage terms since the new exchange rate system was introduced in 1999. Separately, the PKR was changing hands at Rs269 per dollar in the open market at 4:15pm, according to data shared by the Exchange Companies Association of Pakistan (Ecap).

This equates to a depreciation of Rs7, or 2.67pc. Alpha Beta Core CEO Khurram Schehzad said a “substantial” amount of remittances started flowing into the country through formal channels. “Remittances are expected to cross $2.5 billion per month again to gradually reach close to $3bn in the coming months, while exports proceeds are also expected to improve by at least $500 million in the next few months. “These potentially improved inflows due to currency adjustment (and rerouting of flows from hawala market) should be able to support the country’s forex reserves and therefore stabilise currency parity, and make way for releasing imports (already stuck at ports), retiring of LCs (letters of credit) and so on,” he commented.

Schehzad said that if the government had removed the cap four months ago, the country would not have had to pay a huge inflation cost in the coming months, lose $6bn on various counts, see a decline in credibility and create a huge grey market. “Hope the policymakers now continue with other required adjustments and build a policy action and reform strategy to stabilise the economy and shield the poor with targeted relief,” the Alpha Beta Core CEO added. Director of financial data and analytics portal Mettis Global, Saad bin Naseer, also said that inflows, including export proceeds and remittances, that had stopped flowing through formal channels for some time, were seen again on Friday after the adjustment. “A substantial amount has been received. The dollar is expected to stabilise,” he said, adding that the market was expected to get a new direction once money was received from the International Monetary Fund.