Rupee loses further ground

Published September 16, 2022

KARACHI: The rupee fell for the 10th consecutive session against the US dollar on Thursday and lost Rs1.56 to close at Rs235.88 in the interbank market.

On Wednesday, the rupee lost 2.40 to the dollar.

Zafar Paracha, secretary general of the Exchange Companies Association of Pakistan (ECAP), said there was a “lot of pressure” on the rupee because friendly countries who had promised to give money have not done so due to which sentiments have changed, Dawn.com reported.

“The smuggling of dollars and goods to and from Afghanistan and Iran is at its peak,” he said.

Mr Paracha attributed the rise in smuggling to the government’s decision to impose heavy regulatory duties on the import of non-essential and luxury items and added that it had led to pressure in the open market while dollars in the interbank market had “nearly dried up”.

“Exchange companies, which sold between $25m and $30m a day, are not able to sell as much at all now. We are making efforts to ensure that the dollar rate does not rise beyond Rs240 in the open market, but the rates in the interbank and grey markets are going up,” he rued.

The ECAP general secretary said the government had imposed further rules and regulations on exchange companies, after which people were not coming to exchange companies and were instead going to the grey market. “The dollar is being sold informally instead of formally. The greenback is being sold at Rs248 in Peshawar and Rs250-252 in Afghanistan,” he added.

Mr Paracha also criticised the government for “not paying attention and controlling expenditure”. He added that Pakistan was not receiving the required amount of aid because of what he termed a “trust deficit”.

He said the market sentiments had changed due to the political situation and that talks about default had restarted.

Meanwhile, Topline Securities CEO Mohammad Sohail said the rupee would remain under pressure until Pakistan’s current account deficit was reduced or inflows were received from friendly countries.

“Considering global financial conditions, getting funds on a commercial basis and through Eurobonds is not possible,” he commented.

Published in Dawn, September 16th, 2022

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