The State Bank of Pakistan (SBP) has discouraged interbank trading as the shortage of US dollar currency notes has pushed the Pakistani rupee to its lowest weekly level in more than two decades, as reported by Bloomberg.
According to the report, the central bank has requested that commercial lenders handle import payment demands from their inflows, such as exporter accruals and remittances. They also mentioned that the bank must obtain approval from the monetary authority if it still needs to borrow.
Other sources said that some banks are asking the SBP for approval and are offering dollars at a premium, which, in turn, is raising prices for their consumers.
On 20 July, banks transferred dollars to energy companies at prices of Rs. 238-242 to the US dollar, which was roughly eight percent more than the official closing rate for the day.
Commenting on the repercussions of the ensuing currency crisis, the CEO of V.N. Lakhani & Co., a steel importer located in Karachi, said that the banks that used to disburse foreign payments in a day are now taking more than a week.
Amidst the chaos, the rupee plunged by over eight percent last week, which is the most since 1998, as Pakistan’s foreign-exchange reserves were insufficient to cover fewer than two months of imports.
Nonetheless, SBP’s Acting Governor, Murtaza Syed, told Bloomberg that the country will be able to satisfy its funding demands with a bailout package from the International Monetary Fund (IMF) on the way.
“Our external financing needs over the next 12 months are fully met, underpinned by our ongoing IMF program,” he said.
Throughout history, Pakistan has observed some of the worst-ever episodes of dollar payment pressures in the South Asian region due to surging energy bills and related economic stumbling blocks.
The Minister for Finance, Miftah Ismail, predicted that the scenario will change next month. Talking to media persons in an interview last week, he claimed that the country will soon have more dollar supply than demand.
