Karachi August 23, 2022: Pakistan Rupee drops nearly by a rupee in the interbank against the dollar as foreign currency shortages hit the open market amid an unchanged policy rate when the dollar is strengthening in the international markets.
“Currency dealers said that the latest development has created a shortage of foreign currency, particularly the UAE dirham as each Pakistani needs to declare 5,000 dirhams at the UAE airport at the time of landing this week, and ultimately exportable currencies declined,” says Malik Bostan president of the forex association.
The U.S. dollar hit a fresh five-week high versus major peers on Monday after more Federal Reserve officials flagged the likelihood of continued aggressive monetary tightening ahead of the central bank’s key Jackson Hole symposium this week. The U.S. dollar index, which measures the currency against six rivals including the euro, edged up to 109.13 for the first time since July 15.
The rupee depreciates by 96 paise or 0.4% in today’s trading session to trade at 217.62 in the interbank at PST 12:20. In the last two trading sessions, Rupee dropped by 1.4%. Still, Rupee is up approximately 10.3% from its low hit on the 28th of July 2022 as the country inching toward an IMF deal.
In the open market, the dollar is up by 2 rupees against the dollar to trade at 222.
Yesterday, the Monetary Policy Committee (MPC) decided to maintain the policy rate at 15 percent citing the reason that to cool the overheating economy and contain the current account deficit, the policy rate has been raised by a cumulative 800 basis points since last September, some temporary administrative steps have recently been taken to curtail imports, and strong fiscal consolidation is planned for FY23.
The International Monetary Fund (IMF) Executive Board meeting for the combined seventh and eighth reviews under the Extended Fund Facility (EFF) has been set for August 29th, 2022, according to an IMF representative. Approval of this will release $1.17 billion for Pakistan and provide comfort to other lenders that help in arranging gross financing needs of $35 billion for this year.
