Upward trend of US dollar continues, reaches new high of Rs212

Depleting reserves, greenback’s increased demand is impacting local currency

The upward trend in the rising value of US dollar continues as the greenback reached the new highest value of Rs212 in the interbank market.

Forex Association of Pakistan (FAP) has said in a statement that the local currency dropped further by Rs2.3 against the dollar. The price of dollar at closing hours on Monday was Rs209.96 after an increase of Rs1.21.

According to market players, US currency is being traded between Rs213 and Rs215 in the open market.

FAP Chairman Malik Bostan has said that the depleting reserves are responsible in devaluation of rupee as it has so far fallen to single digit. Bostan also said that Hajj season is also causing an increased demand of US dollar and the greenback’s increased demand is impacting the local currency.

Market has been worried due to continuous devaluation in rupee compared with foreign currency because the greenback has depreciated by a colossal loss of Rs6.4 during the last week.

However, economists and financial experts have been linking the devaluation of rupee with depleting foreign exchange reserves that are supposed to improve after revival of IMF deal. The IMF deal has been put to a halt since April after the previous government had reneged on its commitments after announcement of fuel and energy subsidies.

Finance Minister Miftah Ismail yesterday said that within a day or two the revival of Extended Fund Facility (EFF) would be possible.

According to media reports, rumors of stopping opening letters of credit LCs have also caused uncertainty. However, State Bank of Pakistan (SBP) has denied any such situation saying that it did not stop banks from making import payments.