Pakistani currency registered another downtick of Rs0.05 to touch a new three-month low of Rs227.93 against the US dollar in the inter-bank market on Wednesday amid conflicting reports about the revival of International Monetary Fund (IMF) loan programme.

The currency fell sharply by Re1 in the open market and reached Rs238 against the greenback while reports suggested that the rupee partially recovered in the black market.

The positive movement in the black market prompted the gold pricing body to reduce the bullion price by another Rs1,800 to a two-and-a-half-week low at Rs180,000 per tola (11.66 grams).

A leading analyst pointed out that the rupee had kept losing value in the inter-bank market for quite a long time ahead of the likely revival of IMF loan programme.

“The rupee’s fair value is the one prevailing in the black market at Rs260-270 to a dollar. The government has artificially kept the currency overvalued. It should let market forces determine the exchange rate to meet an IMF’s condition,” he said.

Open market currency dealers said they had maintained the exchange rate at Rs237 to a dollar for a long time despite a notable drop in the inter-bank market. The latest depreciation of Re1 in the open market was reflective of the non-stop depreciation in inter-bank.

The rupee has depreciated by 4.5% (or Rs10.14) in the inter-bank market in the past three months compared to Rs217.79 in the early days of October 2022.

Reports, however, suggested that the currency had appreciated by Rs10 to Rs250 against the greenback in the black market.

The recovery came in the wake of reports of revival of the IMF programme following increase in gas prices.

Moreover, consideration of a Saudi bailout package of $15 billion and the plan of selling government’s stakes in state-owned companies to friendly countries forced the illegal Hawala-Hundi operators to jack up the rupee’s value, according to market players.

Published in The Express Tribune, January 12th, 2023.

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