The Dollar Continued to Appreciate, Reaching Rs 201 at the Interbank Market

The rupee continued to depreciate against the US dollar on Monday, with the dollar gaining 80 paise during interbank trading.

According to the Forex Association of Pakistan (FAP), the dollar was trading at Rs.

The dollar had closed at Rs 200.14 on Friday, according to data released by the State Bank of Pakistan (SBP).

The rupee’s continued depreciation since May 10 has been attributed to the country’s rising import bill, widening current account deficit and declining foreign exchange reserves.

When the PML-N-led coalition government came to power on April 11, the dollar was valued at Rs 182.3, after which the value of the green currency rose by Rs 18.75 or 10.28 per cent.

The weekly report shows that between May 13 and May 20, the dollar rose by more than Rs 7, and in interbank trading, it rose from Rs 193.10 to Rs 200.45.

FAP Chairperson Malik Bostan today linked the appreciation of the dollar to the uncertainty in the ongoing talks with the International Monetary Fund in Doha to resume the  $6 billion loan facility, which had been suspended since April.

If the talks succeed, it could lead to the release of  1 bia llion tranche, a development that analysts believe could help improve the exchange rate.

The IMF has made the resumption of the program conditional on the withdrawal of fuel and energy subsidies introduced by the previous PTI government.

It has also made repayment of subsidies a prerequisite for raising the debt program to  $2 billion.

The PTI had on February 28 announced a freeze on petrol and electricity prices for four months (till June 30) as a precautionary measure.

Malik Bostan said that the rupee is likely to remain under pressure till the end of the talks but it is expected to stabilize after the approval of an extension of the IMF loan program.

Saad bin Nasir, director of Mattis Global, said that in addition to the lack of clarity on the IMF agreement, “the government has so far failed to secure funding from friendly countries such as Saudi Arabia and China.”

He added that this situation has further aggravated the overall outlook for the rupee.