PKR touches 300 mark against US dollar for first time in history

Picture source - AFP
Minute Mirror - Subscribe
Minute Mirror - Subscribe

The Pakistani rupee crossed 300 threshold when it traded at a historic low of $300.37 against the US dollar on the interbank market on Thursday, according to data from the Exchange Companies Association of Pakistan (ECAP).

As demand for the dollar surged as a result of the loosening of import restrictions and rising risks connected with financing the nation’s current account deficit, pressure on the local currency has intensified.

The currency dropped to 299.64 against the USD on Wednesday, down 0.21% from Tuesday’s close of 299.01.

Dr. Khaqan Najeeb, an economist and former assistant to the finance minister, told local media that the economy is experiencing a dollar liquidity shortage as a result of pressure from the discharge of already-parked containers as well as declining exports and remittances.

He claimed that the interbank market is also attempting to overtake the kerb market since Pakistan and the IMF agreed to a structural benchmark that calls for the two markets to have a disparity between them of no more than 1.25% on average over the course of five days.

“The open markets are also supply restricted but the demand remains high because the portion of imports not met by the interbank market is also met at the kerb market and because of the dollarization because many people are inclined to believe that the dollar is a storer value and best to hold.”

The expert also noted that monetary policy has not yet had a significant impact on people’s desire to maintain the rupee.

He continued by saying that the best approach to ensure that the Pakistani rupee tends to stabilize is for inflows to rise at the interbank level.