1 US dollar is now worth 200 Pakistani rupees

The US Dollar, which closed at an all-time high of Rs200 on Thursday, extended its gains against the Rupee for the 11th consecutive session today (Friday) as it gained 25 paisa at the close.

According to the Forex Association of Pakistan (FAP), the greenback closed at Rs200.25, another record high. Data released by the State Bank of Pakistan (SBP) showed that the dollar closed at Rs200.10.

The persistent decline in the value of the rupee since last Tuesday has been widely attributed to the country’s rising import bill, widening current account deficit and depleted foreign exchange reserves at the Bank of India. State of Pakistan.

In April, imports increased by 72%, leaving no room for the government to improve its external balance, and the SBP’s foreign exchange reserves fell further by $145 million to $10.16 billion during the week. ended May 13.

And “dollar hoarding and speculative elements have added fuel to the fire,” according to Mettis Global, a financial data and analysis web portal.

Meanwhile, analysts have also linked it to the government’s lack of clarity on its plans to stop the decline in foreign exchange reserves and the uncertainty surrounding the release of funds by Saudi Arabia, China and the plan to bailout from the International Monetary Fund (IMF).

The government has so far failed to convince Saudi Arabia, the United Arab Emirates and China to help them and, although negotiations with the IMF are underway, they could take enough time to aggravate further. the exchange rate regime.

On imports, the government yesterday announced an “emergency” plan under which it banned the import of nearly 800 items – all deemed non-essential – in 33 categories.

However, according to FAP Chairman Malik Bostan, the decision to ban imports alone may not be able to stem the dollar’s flight and the rupee will continue to remain under pressure until the conclusion of talks with the IMF in Doha. .

“The government is taking action but restoring investor confidence will take time,” he said in an interview with Dawn.com.

But FAP Secretary General Zafar Paracha was hopeful that the government’s measure would do well, with his optimism finding confidence in the current account deficit narrowing to $623 million in April.

According to the SBP, the April figure is “only two-thirds [the] March 2022 deficit of $1,015 million”.

“An increase in worker remittances (by $315 million) and a decline in imports (by $246 million) account for this reduction,” the SBP said in a tweet.

Paracha said he expects pressure on foreign exchange reserves to ease further after talks with the IMF conclude and the release of a $1 billion tranche by the international lender, which has been delayed since the blocking of the IMF program with Pakistan in April.

Once that happened, the rupee would recover and the dollar’s flight would be contained, he said.

Meanwhile, Karachi Chamber of Commerce and Industry President Idrees Memon has called for strict border measures as well as restrictions on imports to prevent smuggling, which he says is could result in loss of revenue for the government and create hardship for local manufacturers.

He told Dawn.com he would meet Prime Minister Shehbaz Sharif at 4 p.m. today and brief him on the rupee’s free fall and challenges on the economic front.

Followed by the rise of the dollar to Rs200

The US dollar was trading at 98.50 rupees in June 2013 and broke through 100 rupees to reach 107.5 rupees in November 2013 when the new PML-N government took over Islamabad.

However, the then finance minister, Ishaq Dar, took a popular decision to lower the price of the dollar to 98 rupees in June 2014. The decision was welcomed by the general public, but economic managers, analysts and scholars have considered it flawed and warned of the consequences. The artificial exchange rate eventually weakened the economy and the government ended its five-year term with a current account deficit of $20 billion.

Since 2014, the local currency has never found strength due to falling exports, falling foreign direct investment and a huge current account deficit.

Until August 2014, the exchange rate was 100 rupees per dollar. It remained at Rs105 until FY17. At the end of the term of the PML-N government, the exchange rate was allowed to adjust and the dollar soared to 118 rupees in June 2018.

The next PTI government found the dollar at 123 rupees in August 2018. From then on, the dollar continued to decline for a number of reasons, despite the current account deficit falling to $3.5 trillion. in FY21. The deficit is now over $13 billion in the first nine months of FY22.

In the first year of the PTI government, the dollar rose to Rs155 in June 2019 before falling to Rs164 in April 2020. It was the start of Covid-19 in Pakistan. Speculative money of more than $3.5 billion invested in Pakistan’s treasury bills and investment bonds by foreign investors left the country within months, thus weakening the rupee sharply.

However, a year later, with improving economic activity and increasing remittances as well as increasing exports, the dollar fell to 152 rupees in April 2021, but the exchange rate remained at this level for a short time.

The rupee started to depreciate to reach 156 rupees in June 2021. FY22 started with disappointing sessions for the local currency as it started to decline monthly and then daily, allowing the dollar to break through 200 rupees. In December 2021, the dollar was at Rs177.

The impact of this depreciation has yet to be calculated, but the consequences are obvious as it has plagued the economy with inflation reaching 13.37% in April, negatively impacting every segment of life in Pakistan.

Copyright: Dawn/Asia News Network

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