The Pakistani rupee plunged to its historic low against the US dollar as it traded at 300.37 in the interbank on Thursday, according to data from the Exchange Companies Association of Pakistan (ECAP).
The pressure increased on the local currency as demand grew for the greenback following the relaxation of import restrictions and rising risks associated with financing the country’s current account deficit.
On Wednesday, the currency fell to 299.64 against the greenback, 0.21% lower from Tuesday’s close of 299.01.
Economic expert and former adviser to finance minister Dr Khaqan Najeeb told Geo.tv that pressure from the release of already parked containers and dropping exports and remittances are causing a dollar liquidity crunch in the economy.
The interbank market, he said, is also trying to catch up with the kerb market as Pakistan has agreed to a structural benchmark with the International Monetary Fund of keeping the two markets with a difference which can not be more the 1.25% on the average in five days.
“The open markets are also supply constrained but the demand stays high because the part of imports that are not fulfilled by the interbank market are also taken care of at the kerb market and because of the dollarisation because many people tend to feel that dollar is a storer value and best to hold.”
The expert also pointed out that the monetary policy needs to catch up in creating an impact on people wanting to hold the rupee as well.
