KARACHI: Contrary to the general perception that higher inflows would ease pressure on the rupee, the dollar on Tuesday appreciated by a significant margin in both interbank and open markets.

The State Bank of Pakistan (SBP) reported that the dollar surged by Rs3.78 or 1.34 per cent, to settle at Rs283.04 from Rs279.26 a day earlier, the biggest jump in the FY24 so far.

The rising dollar price is against the expectations of both the government and currency experts. With inflows from IMF, Saudi Arabia and UAE, the forex reserves of the SBP went up to $8.7bn but the exchange rate reacted opposite to the expected stability.

Currency experts said the banks were under pressure of arranging greenbacks for higher payments which increased the dollar price. Under the Stand-By Arrangement with the IMF, a free exchange rate regime is required which means no influence from the central bank or no currency management.

The currency dealers in the open market quoted the rate at Rs290 from Rs286 a day earlier. The Rs4 increase indicates a bullish grey market offering a Rs305 rate.

Published in Dawn, July 19th, 2023