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Rupee falls, dollar jumps as uncertainty looms over IMF bailout package

Greenback closed at Rs206.45 in interbank, gaining one rupee twenty-nine paisas in value
Updated 15 Jun, 2022 05:19pm
<p>A Pakistani man counts US dollars at the currency exchange place in Lahore on May 16, 2019. AFP/File</p>

A Pakistani man counts US dollars at the currency exchange place in Lahore on May 16, 2019. AFP/File

KARACHI: Dollar reached an all-new record of Rs206.45 against the rupee in the interbank market on Wednesday after appreciating by one rupee twenty-nine paisas, as uncertainty looms over the International Monetary Fund package and increasing value of the greenback in the global market.

“The rate of dollar is the most concerning thing for us and there is a problem of balance of payment, current account of deficit, and shortage of dollar,” Federal Chamber of Commerce and Industry Deputy President Hasan Mansha told Aaj News.

The appreciation in the dollar value comes a day after it was closed at Rs205.16 in the interbank market, the State Bank of Pakistan said. Moreover, the Financial Action Task Force meeting started in Berlin on Tuesday where Pakistan is likely to exit from the global money laundering and terrorist financing watchdog’s grey list. Experts were of the view that a new listing would have a positive impact on the economy.

He was of the view that the shortage of dollars was leading to an increase in its value. “It was expected that the country may face a shortage of $40 to $45 billion in the fiscal year and from where such a need will fulfilled,” he said and feared that the dollar value would further increase if remittances and exports were not increased.

Mansha said it would affect people from every walk of life.

Short-term solution

The government should pay attention to two sectors, including IT and overseas employees, which do not need cheap electricity and cheap input. Mansha was of the view that it would give immediate dividends and play an important role in the economy.

“We should send more skilled overseas employees rather than sending unskilled labourers,” he said.

Impact

With the increase in dollar value, the business community has never been happy as it leads to soaring prices and leading to discomfort.

Fahad Rauf, the head of research for Ismail Iqbal Securities, told Aaj News that the sentimental factor, which was the panic among the people about the value of the currency, was one of the reasons for the decrease in the rupee value.

He added that people were panicking, causing a shortage of dollars in the market.

IMF package, 200 mark

Rauf, who has a BSc (Hons) degree from Oxford Brookes University, described the IMF bailout package as “important” for building the confidence of investors. He added that the rupee was not the only currency losing its value, as the Japanese Yen had also depreciated against the dollar because of the global inflation which doubled after the Russia-Ukraine war.

Though the IMF package was key to the Pakistani economy it would not bring too much difference to rupee value as the dollar might fall below the 200 mark as a “celebration” but even if stayed at the prevailing rate would be enough.

The economic expert further said the IMF was “not happy with Pakistan” as there was a condition for tax exemption for the salaried class. “Dollar will remain strong.”

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