In an unprecedented turn of events, the US dollar has reached an all-time high of Rs330 in the open market in Pakistan. This surge in the dollar’s value has left traders and the public bewildered and concerned about the implications it holds for the country’s economy.
On the first day of the business week, the interbank market witnessed a rise of 53 paisas in the dollar’s value. Simultaneously, in the open market, it surged by a staggering 2 rupees, culminating in the record-breaking rate of Rs330. This abrupt escalation has raised eyebrows and sparked numerous questions.
Just last week, the interbank market had experienced a slight dip in the dollar’s value, with a depreciation of 7 paisas, closing at Rs305.47, according to the State Bank of Pakistan (SBP). However, this relief was short-lived as the dollar swiftly bounced back, surpassing the previous week’s high and closing at Rs305.54 in the interbank market. Meanwhile, the open market also saw a significant increase, closing at Rs328, marking a 5-rupee increment.
Economists have pointed to several factors contributing to this remarkable surge in the dollar’s value. The conclusion of the International Monetary Fund (IMF) standby program has created additional pressure on the dollar, affecting both imports and exports. Furthermore, external payments made in July have played a role in the dollar’s appreciation.
The reasons behind this surge are multifaceted, reflecting a combination of domestic and international factors. Economists have identified key drivers:
1. Inflationary Pressure: Pakistan has grappled with high inflation, driven by surging global commodity prices and domestic economic challenges. This inflation has weakened the purchasing power of the Rupee, making it less competitive against the dollar.
2. Balance of Payments Crisis: Pakistan has faced a persistent current account deficit, indicating that it imports more than it exports. To meet external obligations, the country requires foreign currency reserves, placing additional pressure on the Rupee.
3. Monetary Policy: The monetary policy adopted by the State Bank of Pakistan (SBP) has also come under scrutiny. Some argue that the SBP’s decision to maintain a relatively high interest rate has made the Rupee less attractive to investors.
The soaring exchange rate serves as a stark reminder of the economic challenges confronting Pakistan in the months ahead. As the nation grapples with this currency crisis, all eyes will be on policymakers to implement effective measures aimed at stabilizing the Rupee and steering the economy toward a more sustainable path.
The situation underscores the need for a comprehensive strategy to address the underlying issues that have contributed to this record-breaking surge in the US dollar’s value in Pakistan’s open market. The government, the SBP, and other stakeholders will have to work together to navigate these challenging economic waters and ensure the stability and growth of the nation’s economy.