PKR nosedives against USD in interbank

Pakistan's forex reserves

Islamabad: Following the removal of a price cap by the Exchange Companies Association of Pakistan (ECAP), the Pakistani rupee nosedived against the US dollar in the interbank and open markets during intraday trading on Thursday.

At around 11:50 am, the PKR was being traded at Rs255 per dollar — a record low — in the open market, according to data from the Forex Association of Pakistan. This equates to a depreciation of Rs12 or 4.94%

Similarly, in the interbank market, the local currency was trading at Rs250 per dollar, down Rs19.11, or 8.28%, from yesterday’s close of Rs230.89.

Reacting to the development, Dr Khaqan Hassan Najeeb, former finance ministry adviser, said that it was the “right move” to let the market forces adjust the rupee’s value as the country was facing a “severe dollar liquidity crunch, scarce reserves, as well as Pakistan’s need for moving ahead with the IMF”.

Similarly, market expert Muhammad Saad Ali said that the SBP was seemingly adjusting the exchange rate to the market rate – closer to the open market.

He added that the step comes to address the widening difference between the official and open market rates and curb the flow of dollars through the informal market.

more to follow…