After the government confirmed that there was no further need to depreciate the value of rupee, the local currency has once again started falling against the US dollar.
Rupee slumped to an all-time low of 118.30 against the dollar in the open market on Monday, surging the gap between the official and kerb market’s rates to Rs 2.69/dollar.
Recently, Adviser to PM on Finance Miftah Ismail also claimed that Pakistan does not see any further devaluation of rupee in the near future. However, the market situation is acting completely opposite to the claim of the adviser.
Rupee fell to a low of 117.70 to the dollar in the previous session. However, it closed steady at 115.61/dollar in the interbank market.
General Secretary Zafar Paracha told the SBP that the rate of the US currency would come down. He also assured the central bank’s officials of the regular supply of the greenback.
The central bank warned dealers against betting on depreciation of rupee, asking them to strengthen the embattled local currency as ample liquidity is available in the open market to meet foreign exchange demand.
Currency dealers said that the rupee remained under pressure fuelled by a shortage of the greenback in the market.
Dealers told that during the last six months, the local currency devalued by almost 10 percent – first in Dec 2017 by around five percent and then in March 2018 by four and half percent mainly due to the widening trade deficit and declining foreign exchange reserves.
“The increasing spread between interbank and open markets is expected to reduce the formal remittance flows to Pakistan which could encourage the use of hundi and hawala,” a dealer said.
Remittances from Pakistani workers abroad rose 3.55 percent to $14.606 billion in the nine months of the current fiscal year.
They also added that the dollar rates increased due to Umrah pilgrims and investors.
Experts said that the rupee is still flat against dollar in the inter-bank market but the local currency failed to keep its level versus the dollar in the open market because of strong demand.
Meanwhile, SBP officials said the difference between the open market and interbank rates for the US dollar should not widen. They added that the central bank will intervene when there is a shortage of dollars in the market.