In an unexpected turn of events, the relentless depreciation of the Pakistani rupee came to a temporary standstill on Monday, thanks to recent commitments from the army chief and business leaders to address the country’s economic challenges head-on.
Data from the State Bank of Pakistan (SBP) revealed that the rupee experienced a slight dip of 0.08%, or Rs0.17, reaching a new all-time low of Rs305.64 against the US dollar in the interbank market. Over the past three weeks under the caretaker government, the currency has suffered a cumulative decline of 5.6%, equating to over Rs17.
In the open market, the rupee remained unchanged, closing at a record low of Rs328 against the dollar on Monday, as reported by the Exchange Companies Association of Pakistan (ECAP). ECAP General Secretary, Zafar Paracha, expressed his views to The Express Tribune, highlighting the currency’s potential recovery following Chief of Army Staff (COAS) General Asim Munir’s recent dialogue with business leaders. During this meeting, the COAS reassured them of his unwavering commitment to revitalising the nation’s struggling economy.
The meeting has injected hope and confidence into the capital markets, ending a prolonged period of negative sentiment. Paracha remarked, “Today’s range-bound movements in the rupee-dollar exchange rate suggest that the domestic currency may soon strengthen against the greenback… the pressure on the rupee is expected to gradually subside.” He emphasised that there is ample room for the rupee to regain its value, particularly by narrowing the substantial 7% gap, equivalent to Rs22, between exchange rates in the interbank and open markets. The IMF has recommended reducing this gap to a maximum of 1.25% (Rs4).
In addition to cracking down on currency and commodity smugglers, the chief has pledged that Pakistan is ready to attract multibillion-dollar investments from across the globe, including friendly nations. Furthermore, he disclosed plans to privatise loss-making state-owned entities (SOEs) to mitigate the cumulative losses plaguing the economy. Paracha concluded, “The meeting has set a positive direction for the capital markets, assisting in arresting the rupee’s freefall and stabilising the Pakistan stock market.”
Gold prices see a decline
Simultaneously, gold prices witnessed a decrease of Rs700 per tola (equivalent to 11.66 grams), reaching Rs239,100 in Pakistan.
Published in The Express Tribune, September 5th, 2023.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
Read the full story at the express tribune website.
