The difference between rupee-dollar exchange rates in inter-bank and open markets has remained significantly high compared to the International Monetary Fund’s (IMF) recommended level of 1.25%, breaching a lender’s condition and putting question mark over the ongoing $3 billion loan programme.

Pakistani rupee closed unchanged on Thursday at the three-month low of Rs294.92 against the US dollar in the inter-bank market, according to State Bank of Pakistan’s (SBP) data.

In the open market, however, the currency managed to recover almost half a percentage point, or Rs1.50, at Rs301 against the greenback, narrowing the spread to around 2% (or almost Rs6). However, the difference is still significantly high.

Market talk suggests the exchange rate stood higher in retail trade than the one reported by the Exchange Companies Association of Pakistan, signalling that the difference was wider than 2%.

As part of the loan programme agreed in late June, the exchange rate gap should not exceed 1.25% in any of the five consecutive days. However, this condition has been violated.

In the past two consecutive working days (Tuesday and Wednesday), the rupee lost slightly over 2% to a three-month low at Rs294.93/$.

Published in The Express Tribune, August 18th, 2023.

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