KARACHI: The Pakistani rupee dropped to its lowest level against the US dollar in the Kerb market in seven weeks, it is now trading at Rs125 against US dollar on Wednesday.
It is observed that this is the outcome of the meeting held earlier this week between Asad Umar, finance minister and the currency exchange dealers.
Pakistani economy is facing various challenges due to external factors, resulting in deficit of foreign exchange reserves. However, the latest government is geared up for a plan to delineate on the steps to determine these issues including a discrete likelihood of International Monetary Fund (IMF).
According to statistics the foreign exchange reserves on August 31st, 2018 have plunged to $9.88 billion, due to which the latest Pakistan Tehreek-e-Insaf (PTI) government has authoritatively extended an invitation to IMF team for discussions.
The economists suggests that if Pakistan agree to attain a bailout package from the IMF, the Pakistani rupee will plunge more against the US dollar and other main foreign currencies.
In the kerb market, the US dollar was being traded between Rs125.3-125.5. However, in the inter-bank market the rate remained constant at Rs124.4 against the US dollar, as per the data revealed by the central bank.
According to Zafar Parachi, the General Secretary of Exchange Companies Association of Pakistan (ECAP) the reason behind the fall in rupee value is due to many reasons, including the anecdote that it will depreciate to almost 5% in the inter-bank market.
Pakistani rupee has been devalued by almost four times since December 2017, and stood at Rs128.17 till the day after general elections 2018.
Just after the general elections 2018 results, the rupee recovered against US dollar, it elevated in the first week before stabilizing at the rate of Rs123-124.
Consequently, the saturated supply of US dollar guaranteed the exchange rate to remain unusually lower in the kerb market than the inter-bank market for several weeks.
Previously, it was sold in the range of Rs123-124 in the kerb market conflicting to Rs124 in the inter-bank market.
Also, a meeting was held between the finance minister and currency dealers, the agenda of the meeting was to trim down the currency limit for travellers from $10,000 to $5,000 as it was one of the main reason behind US dollar leakage.
It is further noted that smugglers mostly exploited the travel limit and the finance minister, Asad Umar assured the currency dealers that the government will ensure to crack down on smugglers, hundi and hawala system operators in order to wedge dealer escape.