ISLAMABAD: The rupee-dollar exchange rate continued to demonstrate volatility on Tuesday and the greenback further gained in the inter-bank by hitting Rs212 level.
Though the Finance Minister claimed the signing of govt-IMF agreement signing in a day or two, rupee continued to lose its value against the US dollar and other major currencies.
The rupee continues its downtrend, which has also been attributed to the quarter-end payments due to the country’s rising import bill, widening current account deficit and depleting foreign exchange reserves other than the delay in the revival of the IMF programme.
The latest fall since the start of the week in the rupee’s value against the greenback comes after traders resorted to panic buying on reports that some commercial banks had run out of foreign currency.
Businessmen have urged the State Bank of Pakistan (SBP) to play its due role in controlling the free-fall of the rupee. However, the central bank seems helpless to control the situation as it cannot supply dollars in the market to support the rupee since its own stock of dollars also stands at a depleted level.
Pakistan’s foreign exchange reserves (held by the SBP) have depleted to a critical level and the country has less than six weeks of import cover remaining. The reserves are currently below $9 billion.
The country is fulfilling the prerequisite conditions to revive the IMF loan programme to avoid default on international payments.
“The currency will continue to fall until Pakistan manages to strike a staff-level agreement with the International Monetary Fund (IMF),” AA Commodities Director Adnan Agar said.
The analyst was of the view that the investors’ confidence is completely shattered which can only be strengthened by positive development on the IMF front.
Agar also mentioned that depleting foreign exchange reserves have triggered panic buying, giving speculators a chance to play with the demand and supply of the greenback.
Since the beginning of this fiscal year (July 1, 2021) to date, the rupee has collectively dropped by over 30% (or over Rs52) compared to the previous fiscal year’s close at Rs157.54.
