KARACHI: The value of the US dollar hit an all-time high of Rs 128.26 in the interbank market on Monday, according to forex dealers.
The dollar rose by Rs 6.75 in the interbank market, the forex dealers said. As the market opened, the rate of dollar soared to a high of Rs126, then went to Rs125.50 before rising once again to Rs127.50 and then further spiking to Rs128.26.
In the open market, the US dollar rose by Rs4 taking the rate to Rs128.20.
At the close of business on Friday, the rate of dollar closed on Rs 121.54 in interbank foreign exchange market.
When contacted by Reuters, a central bank spokesperson attributed the rupee’s decline to market forces.
“Market forces are driving the exchange rate,” Abid Qamar, the central bank spokesperson, told Reuters via a text message.
Meanwhile, the benchmark KSE-100 Index lost 450 points and reached below 40,000 points in the first half of trading.
The benchmark index is currently at 39,821 points.
Pakistan’s economic fundamentals have deteriorated ahead of the July 25 general election, with most financial analysts expecting the next government will need to seek a post-election bailout from the International Monetary Fund (IMF).
Pakistan’s current account balance has been widening sharply, while foreign currency reserves have plummeted over the past few year
On June 14, the rate of dollar closed on Rs121.39. Dollar rose to Rs1 during that day and also witnessed a sharp increase to Rs122 at one point.
Further on June 11, the US dollar closed at Rs119.84, after reaching a record high of Rs121 earlier that day.
Increasing imports and a widening current account deficit were cited as the possible reasons for the hike in the value of the foreign currency.
Despite the continued growth in exports (13.3 percent in Jul-Apr FY18) and some uptick in remittances, growing imports have pushed the current account deficit to $ 14.0 billion during the first ten months of FY18, which is 1.5 times the level of deficit realised during the same period last year, SBP said.
The bank said this market-driven adjustment in the exchange rate along with other recent policy measures were expected to contain the imbalances in the external account, thereby containing aggregate demand and also facilitating the prospects for generating non-debt creating inflows.
In March, the dollar shot up by Rs4.93 in the inter-bank market to hit a high of Rs115.5 before coming down to Rs115 at the close of business. Since December, the rupee has depreciated by about 14 percent.
Published in Daily Times, July 17th 2018.