The State Bank of Pakistan and Minister of Finance appeared to be at loggerheads as both issued conflicting statement in relation to Rupee's free fall on Wednesday, depreciating the domestic currency by 3.1 percent, which is the largest decline in a single session in almost nine years.
The statement of the ministry of finance came in the evening which quoted Finance Minister Ishaq Dar as saying that he would not allow exploitation in the name of political disturbance and would carry out investigation against those individuals, financial institutions and banks who artificially reduce the value of the Rupee against the US Dollar.
Following this statement, the State Bank of Pakistan, the central bank came out portraying economic indicators which have shown growth in the decade with GDP reach to ten-year high, subdued inflation and increase in credit to private sector.
However, with pinch of spice, the central bank said that the movement in the currency reflects the current state of economy which has been showing imbalances on the external front. The current adjustment in the currency has been the reflection of the economic fundamentals.
Moreover, according to analyst the statement of both the apex authorities showed that there has been gulf and on this thorny issue as a single rupee depreciation in the value of the local currency increases the cost of borrowing by Rs.70 Billion and Wednesdays depreciation will increase the cost by almost Rs. 230 Billion,
The execution of several deals on higher rate has been dealt as big blow for the importers and it would have serious implications. “We are import driven country and increase in value of dollar verses on dollar on inflate price hence leading to increase at interest rate which has been on the lowest side since last over one year”, said an analyst