KARACHI: The US dollar on Monday continued hitting another new peak by appreciating Rs1.51 against the local currency at 203.86 as the State Bank of Pakistan (SBP) and the government look helpless to arrest the rupee’s sharp devaluation that has triggered skyrocketing inflation and eroded the purchasing power of consumers.

The rupee’s devaluation is no more a concern for the currency market alone but the entire trade and industry including the services sector are shocked and clueless.

Currency dealers said the dollar was traded as high as Rs204.50 in the interbank market on Monday but closed at a lower price. However, the currency market rates differ from the ones provided by the SBP.

According to the central bank the dollar was closed at Rs203.86 but the Exchange Companies Association of Pakistan reported the interbank rate at Rs204.

In the open market, the dollar was traded at Rs205, an increase of Rs2 on a day-on-day basis.

Since the inception of the new government, the dollar has appreciated by Rs21 and the trend shows it will keep moving upward. The finance minister did not come up with any strategy in the budget to save the local currency. The appreciating dollar has not only made imported goods and services prices costlier but is the strongest force pushing inflation in the economy.

Currency dealers said two months have gone and the government couldn’t secure any dollar inflows from anywhere creating an ideal situation for speculative forces to manipulate the exchange rates.

The demand for dollars is still high but the rapid appreciation in its price is not justified, they added.

Bankers believe the consistent decline in the SBP’s foreign exchange reserves is the key reason for the weakening of the local currency against the greenback.

They said despite record remittances and handsome growth in exports, the rupee remains under pressure due to surging imports and a large current account deficit.

Published in Dawn,June 14th, 2022