The Pakistani rupee experienced a significant depreciation of Rs3.01 against the US dollar during interbank trade on Tuesday.
According to the State Bank of Pakistan, the local currency was trading at Rs291.50, representing a one percent decrease compared to the previous close of Rs288.49.
In the open market, the dollar reached Rs300 in the afternoon.
Zafar Paracha, a currency dealer, stated that the rupee’s depreciation was not unexpected. He explained that, as per the agreement with the International Monetary Fund (IMF), the difference between the open market and interbank exchange rates should be around 1 percent.
Paracha further explained that the open market was witnessing an upward trend, which was also influencing the interbank market.
Regarding the impact of the caretaker set-up on the dollar rate, Paracha emphasized that the outgoing government often left difficult decisions to the caretaker government as they did not have any political stakes.
Paracha predicted that the rupee would continue to face downward pressure and highlighted the need for structural reforms to address conflicting government policies.
He stated, “Our financial credentials are excellent, but our policies are lacking.”
On Saturday, the US dollar had reached 302 against the rupee in the open market, surpassing the boundaries set by the IMF, which aimed to maintain a difference of 1 to 1.5 percent between the open and interbank exchange rates.
Under the $3 billion standby arrangement signed with the IMF in June, the previous coalition government had agreed to maintain a single currency rate in both interbank and open markets, allowing for a slight difference of up to 1.5 percent increase in the open market’s value.