KARACHI: The US dollar snapped the rupee’s four-day rising streak and gained Rs2.38 in the interbank market on Tuesday, the first appreciation in the new fiscal year.

The dollar was traded at Rs206.94 in the interbank market against Rs204.56 a day earlier. Currency dealers said the sudden jump in dollar price was the direct outcome of the Punjab chief minister’s decision to provide free electricity to 9 million households using up to 100 units a month.

The currency market received the decision as an announcement of the delay in the IMF tranche. The government withdrew all subsidies on oil prices and electricity across the country to persuade the IMF to relese the tranche. The withdrawal of subsidies resulted in a sharp increase in fuel prices which pushed up the inflation to 21.3pc in June.

Currency dealers said the Punjab government’s decision about free electricity convinced the market that the IMF would delay its funding to Pakistan.

“Also the New York banks are closed since Saturday while the Pakistani market will remain closed during the Eid holidays, which has created a shortage of dollars, hence the price of greenbacks increased,” said Malik Bostan, Chairman Exchange Companies Association of Pakistan. The dollar was traded at a price of Rs207 in the open market but the trading remain thin during the day.

Published in Dawn, July 6th, 2022