Rupee continues to decline against the dollar following a cash shortage.
As the nation struggles with a money shortage, the Pakistani rupee lost more ground against the US dollar during Tuesday’s intraday activity on the interbank market.
A currency crisis that analysts claim is being caused by the United Arab Emirates’ new regulations, smuggling, and the lifting of the import ban caused the local currency to lose Re1 versus the dollar and close at 217.66.
There has been a spike in the open market price of the US dollar as a result of the UAE’s requirement that Pakistani travellers report 5,000 dirhams at the airport upon arrival.
Dr. Khaqan Hassan Najeeb, an economist and former consultant to the federal ministry of finance, claimed that recent political developments are partly to blame for the rupee’s decline, which is producing market anxiety in addition to the dollar’s global strengthening.
He added that the State Bank of Pakistan’s (SBP) declining foreign reserve holdings were another factor in the decline. With only $7.8 billion in reserves, there is barely enough money to cover a month’s worth of imports.
According to Arab News, the local unit’s decline was caused, among other things, by its smuggling to Afghanistan, where dealers receive greater prices, according to Exchange Companies Association of Pakistan (ECAP) General-Secretary Zafar Paracha.
In addition, the government’s move to lift the prohibition on the import of luxury and non-essential commodities in order to satisfy an IMF requirement is also gradually weakening the rupee.
Prior to the Fund’s executive board meeting, which will be held in Washington on August 29 and when Pakistan’s request for the loan programme to resume would be discussed, the ban was lifted.
However, it appears that the market did not react to the development of money from Qatar.Deputy Governor of the State Bank of Pakistan (SBP), Murtaza Syed, stated in a briefing that Qatar will contribute $2 billion, Saudi Arabia will contribute $1 billion, and the United Arab Emirates will contribute a comparable sum to cover Pakistan’s $4 billion funding gap.
