After plunging to a record low last week, the PKR depreciated by another Rs6.5, trading at Rs269.1 per dollar in the interbank market around 12pm on Monday, according to data shared by the Forex Association of Pakistan (FAP).
This equates to a loss of 2.48 per cent from Friday’s close of Rs262.6.
Exchange Companies Association of Pakistan (Ecap) General Secretary Zafar Paracha attributed the rupee’s depreciation to a shortage of dollars. “The supply of dollars has not been restarted. We do not know where the banks will get the supply from but there is no arrangement,” he said.
He was referring to the SBP deputy governor’s assurance to exchange companies’ representatives in a meeting last week that commercial banks would be directed to supply dollars to the change companies.
“There is a lot of panic in the market. If dollars are received, it will cool down a bit. As long as the market doesn’t settle, people will not sell their remittances or export proceeds,” Paracha said.
The Ecap general secretary criticised the government for delaying the decision to remove an unofficial cap on the exchange rate, saying it had worsened the situation. “The policy should not be dictated by a finance minister’s mood,” he said.
Tresmark’s Head of Strategy Komal Mansoor said most analysts believed the rupee would weaken to Rs275 per dollar and then consolidate towards Rs270 after the International Monetary Fund (IMF) approved the disbursement of a $1.2 billion tranche.
“In spite of interest rate hike, devaluation round, fuel price hike, there are still differences between Pakistan and the IMF. But it seems like Pakistan’s position has changed from resisting to negotiating. If things fall into place, we may see IMF inflows as early as mid-February,” she said.
