KARACHI: The US dollar rose Rs1.90 on Tuesday in the interbank market, driven by robust demand for greenbacks amid low supply. The market was hoping for a positive outcome from new discussions with the IMF and Prime Minister Shehbaz Sharif’s abroad visit.
Banks handled the dollar with caution, but it appreciated against the rupee. The State Bank of Pakistan (SBP) reported the closing price as Rs184.44, up from Rs182.54.
The dollar’s strength prompted the rupee to lose 99 paise on Monday, after losing 3.65% in the previous seven sessions. From a low of Rs188.18 on April 7, the rupee surged to Rs181.55 thanks to the change in Islamabad’s administration.
“There is a fear that the dollar may strengthen more if uncertainty persists,” said Atif Ahmed, an interbank currency broker.
Dealers hoped China would soon repay $2.4 billion in loans, easing IMF pressure. The new finance minister is said to be in touch with the IMF.
According to Atif, the prime minister will visit Saudi Arabia and China, both of which have helped Pakistan strengthen its external accounts and foreign exchange reserves.
Experts and dealers said stronger exports and SBP reserves will only help the exchange rate. However, the central bank has lost $9.224 billion in foreign exchange reserves since August 2021.
An official warned that if the current account deficit reaches $15 billion by the end of this fiscal year, the dollar will shortly approach Rs190.
The US dollar’s continuing rise has bloated the local economy, as imports touch almost every sector. To combat growing inflation, the State Bank recently raised interest rates by 250 basis points.
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