In the interbank market on Monday, the US dollar rose to a historic high of Rs204 against the local currency, with analysts attributing the rupee’s decline primarily to pending oil-related payments and declining foreign exchange reserves.
According to the Forex Association of Pakistan (FAP), the rupee fell 1.85 percent from last week’s close of Rs202.35 to an all-time low against the dollar. According to State Bank of Pakistan (SBP) data, the dollar closed at Rs203.86.
The FAP’s Malik Bostan linked the rise in the dollar’s value to the payment of oil import bills. He predicted that the rupee would remain under pressure until an agreement with the International Monetary Fund (IMF) was reached. “The targets set for imports and exports in the next fiscal year have a huge gap, indicating that the market will have to acquire loans again next year,” Bostan continued, adding that “speculation” was also on the rise. The rise in the dollar, according to Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan, is due to foreign companies taking their profits out of the country.
According to SBP data, the rupee began gaining against the US dollar on May 27 and continued to rise for five consecutive sessions. The dollar has been steadily rising as a result of the country’s increasing imports, declining foreign exchange reserves, and uncertainty surrounding the IMF’s $6 billion facility, which has been stalled since April. On June 3, the dollar began to recover. Currency dealers labelled it temporary, attributing it to oil price shocks that would increase inflation.
The SBP reported that the country’s total foreign exchange reserves fell to $15.176 billion last week, while commercial banks held $5.950 billion.
The PTI blamed the new budget for the rupee’s depreciation and stock market decline. Former Finance Minister Shaukat Tarin tweet stated that the markets never lied and that their negative responses demonstrated that the coalition government’s budget was rejected by the public. “Inflation of 24%, which will rise further due to power and gas tariffs, continues to bedevil the common man who has been crushed,” Tarin said, insisting that new elections be held.
Former federal minister Asad Umar tweeted that the stock market’s downward trend and the rise in the value of the dollar demonstrated the “public’s rage.” “According to the imported finance minister, the IMF is also dissatisfied with the budget. So, besides the factories that make candies, who is content?” He inquired.
Meanwhile, PTI leader Chaudhry Fawad Hussain emphasised that “these times demanded that we turn the page.” “The leadership of both institutions (in the country) should not stand by and watch as the country sinks. Rather, work toward a solution.”