With no IMF accord in sight, dollar rises to Rs172 in interbank market

The US Dollar rose against the rupee on Tuesday, gaining Rs1.3 to reach Rs172 in the interbank market, up from the previous day’s closing rate of Rs170.7.

Zafar Paracha, the chairman of the Exchange Companies Association of Pakistan, told Dawn.com that the increase was caused by higher demand for the greenback due to the delay in the International Monetary Fund’s (IMF) loan programme.

He said pressure could continue on the rupee until the confirmation of the IMF deal.

“It was expected that after the confirmation of a $6 billion IMF loan, $1bn would be immediately available which would improve the supply in the interbank market,” the chairman explained.

Last week, Adviser to the Prime Minister on Finance and Revenue Shaukat Tarin had announced that an agreement with the IMF over the revival of the $6 billion Extended Fund Facility had been reached and a formal accord would be signed later in the week.

But a formal agreement has yet to be announced.

Meanwhile, Forex Association of Pakistan President Malik Bostan explained that the increased demand for the dollar was coming from importers. He said the import bill was increasing every day and $14bn had to be paid by the end of the current fiscal year.

“If the dollar supply does not increase in such a situation then the pressure on the rupee can further rise in the coming days,” Bostan said.

Last month, the dollar had hit a historic high on October 26 and crossed the Rs175 mark to set a new record, trading at Rs175.27 with one currency dealer saying that “nobody knows where is the boundary of this devaluation of the local currency.”