 to Rs265.83 against the US dollar in the interbank market){kind=link}
KARACHI: Around 12:45 pm on Wednesday, the Pakistani rupee drops 1.65% (or Rs4.33) to Rs265.83 against the US dollar in the interbank market.
The most recent decline comes after the International Monetary Fund (IMF) raised concerns with the current administration over the ongoing dominance of the rupee in the interbank market.
The rupee also suffered as Moody’s Investors Service predicted that the probability of the nation defaulting on the repayment of its foreign debt has peaked with little likelihood of recovery.
To avoid an impending default on the repayment of its foreign debt, Pakistan is negotiating with the IMF to restart its $6.5 billion loan program.
On Tuesday, the rating agency lowered the government’s local and international credit ratings from Caa1 to Caa3.
Since the availability of US dollars in the domestic economy has decreased dramatically, the agency has reduced the rating twice in the last four months.
Prior to this, on Monday, the local currency had increased by 6.5% (or over Rs17) to reach a one-month high of Rs259.92.
It decreased 0.60%, or Rs1.58, on Tuesday to settle at Rs261.50 in the interbank market.
According to market sources, the value of the rupee in the interbank market should be equal to that of the black market, which is now valued between Rs. 285 and Rs. 295 in Pakistan and Afghanistan, respectively.
Yet one analyst warned that because the black money market is far smaller than the interbank market, the value of the currency might not match.
People think that the illegal market is worth between $300 and $350 million each month, compared to approximately $6 billion on the interbank market.