Data from the Exchange Companies Association of Pakistan (ECAP) showed that on Thursday during intraday trade, the Pakistani rupee crossed the 300 threshold against the US dollar.
As demand for the dollar increased as a result of the relaxation of import restrictions and the rising risks associated with financing the nation’s current account deficit, pressure has increased on the local currency, which is currently trading at a historic low of 300.25.
The USD is currently trading at Rs314 against the local currency, making the difference between the interbank and kerb rates Rs13.75, or 4.57%, according to ECAP.
The currency dropped to 299.64 against the USD on Wednesday, down 0.21% from Tuesday’s close of 299.01.
The interbank market, he said, is also trying to catch up with the kerb market as Pakistan has agreed to a structural benchmark with the International Monetary Fund of keeping the two markets with a difference which can not be more the 1.25% on the average in five days.
“The open markets are also supply constrained but the demand stays high because the part of imports that are not fulfilled by the interbank market are also taken care of at the kerb market and because of the dollarisation because many people tend to feel that dollar is a storer value and best to hold.”
Dr. Khaqan Najeeb, an economist and former adviser to the finance minister, told Geo. tv that the economy is experiencing a dollar liquidity crunch as a result of pressure from the release of already-parked containers as well as declining exports and remittances.
The expert also noted that monetary policy has not yet had a significant impact on people’s desire to hold the rupee.
He continued by saying that the best way to ensure that the Pakistani rupee tends to stabilize is for inflows to rise at the interbank level.
“Also the certainty on the economic plan and the future planned inflows will also help as the next tranche may not be due in the coming months,” he said.
