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Rupee keeps dropping against the dollar.

At the beginning of the new work week on Monday, the Pakistani rupee continued to depreciate against the US dollar, as the huge destruction brought on by the floods has only made the nation’s economic problems worse.

According to the State Bank of Pakistan, the local currency lost Rs1.64 to the US dollar in the interbank market and ended the day at Rs229.82.

The lack of a robust central bank intervention and the lack of a clear plan to revive the economy, according to traders, would cause the Pakistani rupee to continue to fall against the dollar this week.

Foreign exchange trader: “Investor uncertainty has been fueled by the sharp decline of the Pakistani rupee of more than 4% in the last six trading sessions,” adding that “Emerging currencies have suffered a lot due to the appreciation of the US dollar against the major currencies following relentless Federal Reserve rate hikes and increased safe-haven demand.”

Losses in the open market are being tracked by the interbank market. The temporary ban on imports has caused the issue to move to the smuggling of goods out of Afghanistan for cash payments in dollars, which has raised demand for dollars on the open market. Other incidental reasons include the need for travellers to Dubai to carry cash in foreign currencies, the declaration of dollars by arriving passengers, and serious accessibility problems for withdrawing money in some provinces.

Foreign currency accounts (FCY) are enticed to withdraw US dollars and sell them on the open market due to the disparity between the Interbank and open markets. In contrast, the Tresmark paper claims that the FCY accounts’ extremely low interest rate isn’t doing much to draw in new deposits.

Numerous prospects for inflows from friendly nations, bilateral organisations, and sovereigns are seen by analysts (in the shape of flood aid). Additionally, there is a good chance that the IMF mission will be expanded by around $2.5 billion. However, the European energy crisis will put the world’s financial markets to the test.