Rupee free fall continues
\n KARACHI
\nThe Pakistani rupee on Thursday continued its downward trend against the US dollar, hitting a new low of 226 in the interbank market \u2014 despite the government\u2019s assurances of market stability in the coming days.
\nThe rupee fell to as low as 228 during the intraday trade, but it closed at 226.81, losing Rs1.89 or 0.83%, the data released by the State Bank of Pakistan (SBP) showed.
\nAnalysts attribute the fresh depreciation to political uncertainty arising out of the outcome of the Punjab by-elections.
\nIn light of the deteriorating economic situation, Prime Minister Shehbaz Sharif had convened an emergency meeting with the country\u2019s economic team and other high-ranking government officials.
\nThe delayed revival of the International Monetary Fund\u2019s (IMF) programme has also played a major part in the rupee\u2019s free fall as despite striking a staff-level agreement with the lender, the loan will be disbursed only after the institution\u2019s Executive Board gives its approval \u2014 which is expected in August.
\nFinance Minister Miftah Ismail, however, believes that the economy is on the right track and once political stability returns \u2014 which has been uncertain since the coalition government\u2019s take over \u2014 the rupee will strengthen against the dollar.
\n\u201cIn terms of real economic fundamentals, we are fine, but political uncertainty screwed us up,\u201d the finance minister told Bloomberg.
\nNeed for \u2018active intervention\u2019
\nShedding light on the situation, economist and former adviser to federal ministry of finance Dr Khaqan Hassan Najeeb said that Pakistan follows a market-determined exchange rate system.
\n\u201cIn this regime, trade deficit and market influencing news makes a lot of impact on currency changes,\u201d the former adviser to the finance ministry said.
\nDr Hassan said that the recent adjustment of the Pakistani rupee is partly influenced by uncertainty due to election results coupled with a Fitch downgrade.
\nTalking about the increased demand for the greenback in the interbank market, the economist said that banks do not cover LC payments on opening but completely cover them at the time of getting the flows.
\n\u201cWith the pronounced rupee slide, financial institutions tried to cover import payments. It created a higher demand in the interbank,\u201d he explained, adding that when the rupee is depreciating exporters hold their proceeds for a better rate in the future.
\nCommenting on the intervention of the central bank, he said that the SBP can smoothen the disorderly movement but limited foreign exchange reserves position, as well as bindings of the IMF considerations, constrained SBP.
\nDevelopment economist Maha Rahman said at this hour, foreign assistance from IMF and our long-term allies and its timeliness is more critical than ever before.
\n\u201cThe [rupee\u2019s] depreciation this week, amongst other factors, has been triggered by the political surprise that the electorate delivered in Punjab on the weekend, and this frenzy should fizzle out soon,\u201d she said.
\nBut Pakistan, she said at this hour, needs active intervention as the overall outlook is fast becoming precarious with fast depleting liquidity.
\n\u201cI usually also stress upon long-term planning but at this hour adept fire fighting is extremely critical,\u201d Rahman stressed.<\/p>\n","protected":false},"excerpt":{"rendered":"
Rupee free fall continues KARACHI The Pakistani rupee on Thursday continued its downward trend against the US dollar, hitting a new low of 226 in the interbank market \u2014 despite the government\u2019s assurances of market stability in the coming days. The rupee fell to as low as 228 during the intraday trade, but it closed […]<\/p>\n","protected":false},"author":2,"featured_media":239652,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[2],"tags":[181,7105,6111,3232],"class_list":{"0":"post-272650","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-top-news","8":"tag-dollar","9":"tag-interbank","10":"tag-pakistani-rupee","11":"tag-usd"},"yoast_head":"\n