The rupee fell sharply against the dollar in interbank trade to hit an all-time low of Rs204 on Tuesday afternoon, with the closing rate being Rs202.
Forex Association of Pakistan (FAP) said in a statement that the dollar, against the previous day’s close of Rs200.40, rose to Rs204 during the day.
Malik Bostan, chairman of the Forex Association of Pakistan (FAP), said to local media that the rupee’s fall was because of the falling foreign exchange reserves and over $10 billion in external payments due.
Bostan also suggested that loans from international financial institutions can alleviate the pressure on the rupee. FAP secretary-general Zafar Paracha, in his comments to a local newspaper, blamed the government’s inconclusive talks with the International Monetary Fund (IMF) for the depreciation of the rupee.
Zafar said that investors were hopeful of a breakthrough with IMF but the facility refused to release the funds until the removal of fuel subsidies. FAP secretary-general further pointed out that the development increased the pressure on the rupee.
According to media reports, economic analysts are saying that the rupee’s decline is due to two main reasons. Primarily, this hike in the dollar to the rupee exchange rate is based in oil-related payments and the second main reason is uncertainty surrounding the resumption of the IMF loan facility.
Since the PML-N-led coalition government took over on April 11, when the dollar was valued at Rs182.30, the greenback has risen by Rs20.1, or 11 percent.
A brief history in the rise of dollar price in past few months is as under:
On March 1, the dollar price was Rs172.56 and on March 31 the price was Rs182.35, thus increasing by Rs9.81.
On April 1, the dollar price was Rs183.85 and on April 30 the price was Rs185.71, thus increasing by Rs1.14.
On May 1, the dollar price was Rs185.71 and on May 31 the price was Rs198.56, thus increasing by Rs9.81.
However, on May 26, the dollar had risen to high value of Rs202.56 as well. On June 1, the dollar price was Rs197.72 which today escalated to Rs203.