SBP Denies Rumors of Market Intervention to Bring Down Dollar Price

The State Bank of Pakistan (SBP) on Monday denied any role in the strengthening of the Pakistan Rupee (PKR) against the US Dollar (USD).

According to a report issued by Topline Securities after the Monetary Policy Committee’s (MPC) decision to keep the policy rate unchanged at 15 percent, the central bank had denied rumors that it has sold any dollars in the market.

Quoting the central bank, Topline said that the strengthening of the rupee was due to a reduction in speculative elements and strict administrative measures, and oversight of the foreign exchange market.

According to SBP, the current account deficit could be cushioned due to international assistance in the form of current transfers.

External financing of $4 billion expected

With secured external financing and additional commitments, SBP anticipates that the foreign exchange reserves will improve. The Asian Development Bank (ADB), World Bank (WB), and Asian Infrastructure Investment Bank (AIIB) have pledged to provide assistance/financing of $1.5 billion, $1-2 billion, and $0.5 billion respectively in the aftermath of floods.

The report further highlights that since July 2022, Pakistan has repaid $4.6 billion of its scheduled debt repayment and it intends to meet all its debt obligations going forward.

It is pertinent to mention here that Finance Minister Ishaq Dar has reiterated his claim in recent days that the real value of the US Dollar is below Rs. 200. The finance minister has attributed the depreciation of the Pakistani Rupee to manipulation in the market.

The central bank is currently investigating eight banks for their alleged role in exchange rate manipulation.

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