The US dollar rose above Rs193 on the interbank market early on Friday, achieving an all-time record and surpassing its previous record that surpassed the mark of Rs192.
In the words of the Forex Association of Pakistan, the morning started with the greenback increase to Rs1.10 over the prior day’s closing of Rs192 , and a peak of Rs193.10 at 11 am in the interbank market.
Today marks the fourth day in which the dollar increased to record levels against the rupee. the global currency reaching the record maximum at Rs188.66 during the market for interbank transactions on Tuesday, climbing into Rs190.90 on Wednesday before soaring above Rs192 on Thursday.
Alpha Beta Core Chief Executive Officer Khurram Schehzad said it was anticipated that the dollar’s value will continue to rise in the coming days, connecting the increase to the anticipated strengthening of the dollar’s position on the international market and the increase on interest rates across the US.
“Moreover, our macros are weak and the IMF (International Monetary Fund) is also not on board,” said the official in reference to the uncertainty around an agreement with the international money lender as well as a delayed release of the $1 billion tranche of it.
With these explanations, Schehzad explained, the market for currencies was down and the rupee continued to slide towards the USD was to be expected.
The decline in the rupee against the dollar could also have been blamed on the country’s large import cost.
However, Mettis Global -a analytical and financial data portal has linked the rise in the dollar to the ongoing economic turmoil within the nation, specifically the melting of foreign currency reserves as well as political instability.
This occurs as the reserves in foreign currency from the State Bank of Pakistan fell to $190m up to $10.308 billion over the course of the week which concluded on May 6 the central bank announced on Thursday. The total reserves of the country decreased to $16.375bn and the reserves of commercial banks were $6.067bn in the week.
The ‘Storm of Inflation’ is feared
Exchange Companies Association of Pakistan General Secretary Zafar Paracha presented a dire outlook for the future if the dollar’s value is not reduced and has demanded the declaration of the aforementioned “economic emergency”.
He noted that the dollar has reached a new peak each day, noting it was trading at around Rs193 on the interbank market and was trading for around Rs195 on the open market and 200 on the “grey market”.
“We call [on authorities] every day on the media to manage this country but we don’t see any government,” he stated. He warned that an ongoing rise in the dollar’s value could trigger the creation of a “storm of inflation” of “unimaginable” intensity.
In a reference to Sri Lanka, the island nation experiencing a major financial crisis claimed this could be “very small a trailer” and that the conditions within Pakistan could be much worse. “There (Sri Lanka) the population is only 25 million and here, we have a population of 250m, with people having weapons in abundance.”
Furthermore, he added that Pakistan was also not in excellent relations with the majority of its neighbors and that a further increase in inflation could result in an “security situation”.
Paracha demanded the judiciary and the relevant agencies to join the parties of political opposition to take decisions that are in the best interests of the nation and country.
Noting that the reserves of the country’s foreign exchange were down significantly He said “We only have funds to make imports for one to two months.”
Paracha has also urged the government to limit excessive expenditures, such as the use of funds that are not for development and perks, as well as putting an upper limit on the importation of non-essential products.
Malik Bostan, chairman of the FAP He also proposed limiting the import of non-essential items to stop the dollar from rising even more.
In an interview with Dawn.com, he also suggested limiting the use of petroleum products to help keep the reserves of foreign exchange in a stable state. “The unnecessary use of diesel for running big vehicles should be stopped a further increase in our oil consumption, which has risen by more than 30 per cent, can be prevented.”
Also, he suggested the political parties could come up with an “charter of economy” to stabilize the rupee.
Politicians spar on rupee’s devaluation
In the meantime, PTI chief Imran Khan declared that the current economic climate and the rupee’s decline, “reflects lowest ever confidence in [the] imported government”.
“Market awaiting policy and action, which [the] imported government has failed to provide. Both myself and Shaukat Tarin had warned the ‘Neutrals’ that if conspiracy succeeded, our fragile economic recovery would go into a tailspin. That is what has now happened.”
However, information minister Marriyum Aurangzeb blamed Imran for the decline in dollar value in several tweets.
“Imran Khan has mired Pakistan in a difficult situation. The dollar has reached Rs193 because of Imran Khan. Incompetent, ineligible [rulers], cartels and the Imran mafia that was imposed [on the country] for four years committed economic terrorism against the nation,” she claimed.
Aurangzeb added that the Imran-led government had concluded the agreement in conjunction with IMF and that the country was dealing with its consequences as a result of the rising cost of living. “He is the one responsible for the current state of economic instability in the country.
“Today, if difficult decisions have to be made, Imran Khan is responsible for it,” she stated. “Imran sahib, putting the country’s economy and the nation at stake to save your politics is tantamount to treason … Imran sahib, stopped making a hue and cry and answer [the nation] on inflation.”