Pakistan’s Economy Suffers as Dollar Reaches Record High Against Rupee

On Tuesday, the dollar reached a new record value, and the dollar rate today is Rs287.29 against the rupee in the interbank market, showing a depreciation in the economy. This happened a day after the dollar had appreciated by Rs1.25, and then it rose by Rs2.25 on Tuesday. On Tuesday, the State Bank declared that the dollar’s closing price was Rs287.29, which is an increase from Rs285.02 from the previous day. The currency market remained unsure about the reasons for the recent decline, but some experts suggested that depleted foreign exchange reserves and stalled talks with the IMF for the crucial $1.2 billion tranche could be the cause. Due to this, experts said the local currency declined against the US dollar.

Since Ishaq Dar took charge as finance minister in September, the dollar has appreciated by Rs57, while it has risen by Rs104 since the change of government in April last year. Last month inflation reached 35.4% because of the continuous devaluation of the rupee. Although imports have been severely restricted through official channels, most importers are purchasing dollars from Dubai or the grey market. However, the cost of bringing a dollar from Dubai is over Rs325, which would significantly raise the cost of imported goods and worsen inflation.

The exchange companies, on the other hand, claimed that dollars and other foreign currencies were readily available in the open market at the rates they announced. In a report published by the Exchange Companies Association of Pakistan (ECAP), the dollar rate was reported to have increased to Rs289 from Rs287 the day before. The open market rate increased from Rs287.50 to Rs291 on Tuesday, reflecting the trend in the interbank market, according to dealers.

It is expected that remittances will increase 15-20% during Ramazan, but the rise in the dollar has disappointed businesses. Experts believe that the economy is paying a high price for the political crisis, with currency dealers and analysts lamenting that a whole year has been lost due to political wrangling.