In the open market as well, the US dollar continued to rise against the rupee, reaching the 326 level during trade.
dollar hits 326 as rupee weaken: On Thursday, dealers contacted by Business Recorder reported that they quoted the rupee at 326 for selling purposes and 323 for buying purposes for clients in the open market. This marked an increase from the levels of 325 and 322 observed on Tuesday.
In the interbank market, the currency was still under pressure against the dollar and was trading just above the 305 mark.
Since the caretaker administration assumed control just weeks ago following the resignation of the coalition government led by Shehbaz Sharif, the rupee has remained under pressure.
Sana Tawfik, analyst at Arif Habib Limited (AHL), listed a variety of factors contributing to the local currency’s fresh depreciation run in an interview with Business Recorder.
“Removal of import restrictions has created pressure on import payments, which was reflected in last month’s current account deficit figures,” she claimed.
“Second, rates in the open market are rising as a result of the International Monetary Fund’s (IMF) requirement to maintain a currency difference of about 1.25% between interbank and open markets, with some informal market factors also contributing.
This is also keeping rates low in both markets, she continued.
Under one of the structural standards established by the IMF, the difference in rates between interbank and open markets must be less than 1.25%.
The expert did point out that over the past several sessions, the IMF premium has been growing wider. “The lender needs to reconsider the premium condition, which is having repercussions in the form of rupee freefall,” she added.
Tawfik voiced worry that as the gap is getting wider and more people are turning to informal channels, remittance inflows, which are essential for the cash-starved economy, may likewise be at the lower end.