The US Dollar strengthened against the rupee on Tuesday, gaining Rs1.15 in the interbank market to reach Rs171.85, up from the previous day’s close of Rs170.7.
During intra-day trade, the dollar rose to Rs172. By the conclusion of the day, the purchasing rate of the greenback in the interbank market was Rs171.65 and the selling rate was Rs171.85, according to the Forex Association of Pakistan (AFP).
The dollar gained Rs1.5 in the open market and was trading at Rs174.50.
The spike, according to Zafar Paracha, head of the Exchange Companies Association of Pakistan, was driven by increased demand for the greenback as a result of the International Monetary Fund’s (IMF) loan programme being delayed.
He predicted that the currency would be under pressure until the IMF arrangement was confirmed.
“It was believed that when the IMF loan was confirmed, $1 billion would be accessible immediately, improving supplies in the interbank market,” the chairman added.
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.”