The Rupee’s freefall against the Dollar continued for a second straght day, after the interbank rate reached Rs 260 early on Friday.
The new rate came after an increase of 6.58 as soon as trading began.
The sudden change in value started on Thursday after forex traders announced that they would stop adhering to the unofficial ‘cap’ placed by the State Bank of Pakistan as part of the Finance Minister Ishaq Dar’s policy of keeping the dollar’s value artificially controlled.
The dollar rose by over Rs 24 in a single day on Thursday to a historic high of Rs 255. However, traders said that the the gap between the interbank rate and the open market has still not been fully bridged as the dollar is being traded for Rs 265 in the open market.
The gap between the official and unofficial rates of the dollar had created uncertainties in the economy, with many banks declaring they would follow the market rate not the state bank’s rate for international transactions.
Ishaq Dar, who resumed the reigns of the ministry in last September after a four-year exile, had claimed that the dollar should be valued under Rs 200.
Reuters adds: The Pakistani rupee showed signs of steadying on Friday after steep decline over the previous two days, with hopes raised by an International Monetary Fund team visiting Islamabad in coming days to discuss resuming disbursements from a bail-out package.
On Friday, the rupee recovered from an early drop of 1.8% to stand just 0.2% down trading between 255-259 rupees per dollar.
In the open market, the rupee fell 1.1% to trade between 263-265 per dollar, according to the data and Exchange Currency Association of Pakistan.
The exchange companies’ removal of the cap should move Pakistan closer to the market-determined exchange rate regime that the IMF favours, though the multilateral lender also wants to see fiscal measures from the government to reduce the budget deficit.
Hours after the rupee was left to the market forces to decide its worth, the IMF announced that its delegation will be visiting Pakistan from Jan 31 to Feb 9 to discuss its 9th review of a bailout package agreed for $6 billion in 2019, and topped up to $7 billion last year.
“As we have seen the announcement, and the IMF program is resumed, we should be, God willing, good,” former finance minister Miftah Ismail told Geo TV, adding that it will head off the risk of Pakistan defaulting on its external obligations.
