Exchange Rates
The relentless surge in the value of the US dollar against the Pakistani rupee continued on Monday (today), reaching an unprecedented high of Rs330 in the open market.
On the first day of the business week, the interbank market witnessed a 53 paisa increase in the dollar’s value, while in the open market, it surged by 2 rupees. The staggering climb to Rs330 in the open market has left traders and the public grappling with the implications.
Last week, the dollar’s value had experienced a slight dip in the interbank market, depreciating by 7 paisas and closing at Rs305.47 according to the State Bank of Pakistan (SBP).
However, the respite was short-lived as the dollar bounced back, reaching an all-time high of Rs305.54 in the interbank market, surpassing the previous week’s high of Rs301.
The open market also witnessed a surge, closing at Rs328, reflecting an increase of 5 rupees. Economists attribute this rise in the exchange rates to various factors.
Firstly, the conclusion of the International Monetary Fund (IMF) standby program has led to increased pressure on the dollar, impacting both imports and exports. Additionally, external payments made in July further contributed to the dollar’s appreciation.
Reasons behind Of Alarming surge of US dollar
The dramatic surge in the dollar rate results from a combination of domestic and international factors. Economists identify several key drivers:
- Price Inflation: High inflation, fueled by surging global commodity prices and domestic economic challenges, has weakened the Rupee’s purchasing power against the dollar.
- External Payments Challenge:: Pakistan faces a persistent current account deficit, indicating that it imports more than it exports. This situation necessitates foreign currency reserves to meet external obligations.
- Central Bank’s Financial Strategy: Critics question the State Bank of Pakistan’s (SBP) decision to maintain a relatively high interest rate, making the Rupee less appealing to investors.
The soaring exchange rate serves as a stark reminder of the economic challenges that Pakistan must confront in the coming months. As the nation grapples with this currency crisis, policymakers will face increased scrutiny and will need to implement effective measures to stabilize the Rupee and guide the economy toward a more sustainable path.
