Local currency slumped by Re1 in interbank market
The rupee shed Re1 against the dollar as it remained under pressure in the interbank foreign exchange market on Monday.
The greenback was trading at Rs302 at the closing of the interbank market, as against the closing of Rs301 on Friday, August 25, according to the State Bank of Pakistan.
— SBP (@StateBank_Pak) August 28, 2023
Meanwhile, the rupee was being traded at Rs315 in the open market.
The interim government has formed a committee for the revival of the economy. Some experts have feared that the dollar would further increase and demanded that the government take measures to stop the massive increase in dollar value and the gap in the rates of the dollar in open and interbank markets.
It is pertinent to mention that the former coalition government assured the International Monetary Fund of withdrawing the circular on prioritisation in providing foreign exchange for certain types of imports introduced in December 2022.
“Going forward, we will refrain from formal and informal guidance on the exchange rates of FX intermediaries and will maintain a framework free of restrictions on payments and transfers for current international transactions and MCPs,” the government’s letter to IMF stated.
Additionally, the previous government also vowed to ensure no abnormal premium emerges between the rate of interbank, open, and informal markets.
“The average premium between the interbank and open market rate will be no more than 1.25% during any consecutive five business day period,” the government stated.
Globally, the dollar eased from a 12-week peak on Monday as traders weighed the US monetary path after the Fed Chair Jerome Powell left open the possibility of further interest rate increases, while the yen hovered close to its lowest in over nine months.
Meanwhile, the foreign exchange reserves held by the State Bank of Pakistan declined by $125 million to hit $7.9 billion during the week ended on August 18, compared with $8.05 billion the previous week.
The total forex reserves, including those held by commercial banks, reached $13.24 billion, out of which the commercial banks held reserves of $5.31 billion.