Pakistani Rupee is expected to further plunge vis-a-vis Dollar in official Inter-Bank Market as difference between Interbank and Open Market mark a record Gap of PKR25/Dollar.
Previously, to narrow the Interbank-Open Markets Gap, Central Bank has Devalued Rupee by 9.6%, or PKR25 per dollar in a single day. This move was made in response to the International Monetary Fund’s demand for a market-based exchange rate.
This week, dollar remained relatively stable in the interbank market at around PKR/287/$ mark while the open market rate surged to as high as PKR312/$.
The Exchange Companies Association of Pakistan (ECAP) reported the closing rate for the dollar at Rs309, in contrast to the State Bank’s reported interbank rate of Rs287.13.
With apkr20 – 25 difference between the two markets, maintaining the current banking rate has become increasingly challenging for the State Bank. This rate disparity has negatively affected remittances, which experienced a 29% decline last month and a 13% decline during the first ten months of the current fiscal year, as Foreign Workers resort to Illegal channels of Hundi and Hawala to fetch better rates.
Analysts suggest that a PKR25 difference per dollar may indicate the likelihood of another significant devaluation of the rupee.
The IMF’s reluctance to extend loans to Pakistan, partly due to the deteriorating political situation, has contributed to further uncertainty in the financial market and weakened the local currency.
Rupee has already declined by 60.71 rupees or 21.14% against the US Dollar since January-2023
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