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The US dollar maintained its upward trajectory against the rupee in the open-market, and hit the 326 level during trading.

On Thursday, dealers Business Recorder reached out to said the rupee was being quoted at 326 for selling and 323 for buying purposes for customers in the open-market, up from Tuesday’s levels of 325 and 322.

The Exchange Companies Association of Pakistan (ECAP), however, quoted rates at Rs323 and Rs 320 by the end of trading on Thursday.

The currency also remained under pressure against the greenback in the inter-bank market, and closed at 305.54.

The rupee has remained under stress since the caretaker government took over after the departure of the Shehbaz Sharif-led coalition government just weeks ago.

Talking to Business Recorder, Sana Tawfik, analyst at Arif Habib Limited (AHL), identified a number of factors leading to the renewed depreciation run of the local currency.

“Removal of import restrictions has created pressure of import payments, which was reflected in last month’s current account deficit figures,” she said.

“Secondly, the International Monetary Fund (IMF) condition to maintain a currency gap of around 1.25% between the inter-bank and open-market is driving up rates in the latter, with elements of informal market playing its part as well.

“This is also keeping rates in both markets under pressure,” she added.

The gap between rates in the inter-bank and open markets is required to be less than 1.25% under one of the structural benchmarks set by the IMF.

However, the expert noted that the IMF premium is widening for the last few sessions. “The lender needs to reconsider the premium condition, which is having repercussions in form of rupee freefall,” she said.

Tawfik expressed concern that remittance inflows, critical for the cash-starved economy, will also be at the lower end, as the widening gap is pushing people towards informal channels.

Comments

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faisal Aug 31, 2023 04:32pm
Blame Dar for all this chaos. He was not stupid but economic terrorist.
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Johnny Walker Aug 31, 2023 05:11pm
People are dumping and buying $$$$
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Asim Aug 31, 2023 06:13pm
It was not Dar at all - please don't blame Dar, he is not at fault here, it was the people who got him back "the handlers" on the Pakistan air force jet - they are clearly responsible for this mess. It is easy to get carried away here and blame people who were also planted here by someone else - also to remove a democratically elected government and then imposing criminals on the country is what lead to this downfall. Sadly, no one in the current administration has the capacity or the will to fix this problem as for the neutrals they just need to do left right left right left right - thinking that it may just fix the economy.
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TidBit Aug 31, 2023 06:48pm
@Asim , It is not Dar or that guy. You have short memory and forgot history. It goes back to what you guys did to us in the 90s. I remember living in fear in India, not knowing which Pakistan-trained mujahideen would strike us in Delhi, Mumbai, or Pune. We were sitting ducks. and Pakistan was bleeding us by a 1000 cuts. At that time no one in Pakistan focussed on investing in primary education the rule of law a stable political system and industries. Now those strategies have backfired after two decades.
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Awami Sep 03, 2023 09:42am
@Johnny Walker, They are not fools. That is only way for average person as a hedge against inflation and slowly sinking home currency. Saving in bank deposits sinks you slowly. Real danger of sinking rupee is even the investments coming in real estate will stop.
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