In accordance with an International Monetary Fund (IMF) requirement, the government no longer controls the rupee-to-dollar exchange rate, which has led to the most recent decline.
According to the State Bank of Pakistan, the local currency had reached a day earlier closing rate of Rs230.89 versus the US dollar (SBP). The Pakistan Stock Exchange (PSX) did gain 1,200 points that day thanks to the depreciation of the currency, though.
According to information from the Forex Association of Pakistan, the PKR was trading at Rs255 per dollar in the open market at around 11:40 am, which is also a record low. This represents a depreciation of Rs12, or 4.94 %, from the rate of Rs243 yesterday.
Because of this, the rate differential between the interbank and open markets, which had recently grown to Rs15, was almost completely eliminated.
It was a “much-awaited modification,” according to Mohammad Sohail, CEO of Topline Securities, that permitted banks to offer an exchange rate depending on market supply and demand.
Since Ishaq Dar became the finance minister in late September 2022, the rupee has stayed in government hands. Dar had previously stated that the fair value of the rupee is between Rs180 and 200 per USD.
The finance minister also thought that market forces had twice artificially devalued the rupee to Rs240/USD in 2022 once in July and again in September.
As a result, the central bank investigated banks and found 13 institutions to be at fault. The SBP announced earlier this month that it would take action against the banks soon.
In the meantime, Pakistan gave the United States assurances on Wednesday that it was still committed to the IMF programme even though its reserves had shrunk to barely enough to cover a month’s worth of imports following another $500 million in debt repayment.