Update 2: PKR in bottomless pit, loses 9 rupees

January 26, 2023 (MLN): Continuing its journey towards a bottomless pit, the Pakistani rupee (PKR) has depreciated by over 9 rupees in intraday trade in the interbank market session compared to the previous close of PKR 230.89 per USD.

The dollar was being quoted at 239.98/249.98 (11:34 PST) with the trades being reported at 240 while in the open market, the dollar is being traded at 252.5/255 per USD.

However, according to the sources, there are no sellers of dollars in the market. People are more inclined towards dollar buying. 

The market-based exchange rate with no direct or indirect invention was one of the main requirements to complete the ninth review of the International Monetary Fund (IMF) program to unlock $1.2 billion. 

Considering this, the present scenario is therefore attractive for the investors at PSX as well as they are quite hopeful regarding upcoming inflows. 

It is pertinent to mention that following Tuesday’s announcement by the Exchange Companies (ECs) regarding the removal of the dollar cap in the open market, the dollar in yesterday’s open market was reportedly traded at PKR 252.50 [10:00 am] per USD during the initial trading hours, however, within an hour, the greenback depreciated to PKR 243 per USD down by 4% [11:00 am] in the open market, raising suspicions of undue intervention from authorities.

However, speaking to Mettis Global, Malik Bostan President of the Forex Association of Pakistan said, “The drastic appreciation and depreciation within an hour was only due to speculative elements as we have only removed the cap from dollar rates.”

The rates will be purely determined by the demand and supply available in the market, he added.

Experts are of the view that the decision to cap the dollar rate at the open market in Pakistan has had unforeseen consequences. The cap has created a black or gray market for dollars, as individuals and businesses look for ways to access the currency at a more favorable rate.

The capping of the dollar is seen as a hint of a weakening economy and an increased risk of default.

As the rupee continues to slide down the slippery slope, many are left wondering if there's a light at the end of the tunnel.

The falling rupee has further caused widespread concern among businesses and individuals who rely on imports.

The situation has left many feeling like they're between a rock and a hard place, as they struggle to make ends meet in the face of rising prices. 

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