KARACHI/ISLAMABAD: Bowing to another harsh condition of the IMF, the federal government allowed the exchange companies to manage “free float” of the US dollar in the open market.
With this strategy, a flexible and market-driven exchange rate of the dollar will prevail in the open market. Consequently, from today (Jan 25), the dollar-rupee exchange rate is set to cross 250 rupees in the open market trading.
The representatives of the foreign exchange companies in Karachi announced the decision on Tuesday evening.
The unanimous decision to remove the “cap” on the dollar-rupee trading in open market means that from Wednesday, the price of the dollar in the market will be managed by supply and demand situation.
In other words, the market forces will determine the dollar-rupee exchange rate from today.
The move is one of the conditions of the International Monetary Fund to qualify for the approval of ninth review and release of next tranche, experts said.
Malik Muhammad Bostan, President of the Forex Association of Pakistan said that a meeting with Deputy Governor of State Bank of Pakistan (SBP) Dr Inayat Hussain is taking place on Wednesday (today) morning.
He said, “During the meeting, an action plan would be formulated on the situation arising from making the dollar market-based.”
The plan includes measures to ensure that dollar remittance will be done through banking channels and the open market, instead of through the illegal practice of Hundi Hawala.
The exchange companies are ready to implement this decision, and the central bank will closely monitor the situation to ensure a smooth transition.