Political unrest causes the dollar to rise past Rs215 to an all-time high

 

Political unrest causes the dollar to rise past Rs215 to an all-time high

 

Keywords: Dollar rise, Pakistan inflation, Political unrest

Fears that the IMF and other sources of foreign cash would run out as the political landscape changed as a result of the PTI's victory in the Punjab by-elections caused the US dollar to spike to an all-time high and reach Rs215.20 in the interbank market.

In comparison to the closing price of Rs210.95 on July 15, the dollar gained by 4.25 rupees, according to the State Bank of Pakistan (SBP).

The dollar spiked to Rs217 in the first session before gradually falling to the level that the SBP announced. The exchange businesses, however, stated that it was closed at Rs216.20.

Atif Ahmed, a currency dealer in the interbank market, said: "The country is paying a heavy price for the political uncertainty looming large over Pakistan for more than six months."

He claimed that despite assurances from the Finance Minister Miftah Ismail, aspirations for funding from the IMF and other sources have been dashed.

The currency dealer stated that "the SBP's foreign exchange reserves have been dropping daily," adding that "inflows are out of sight while imports are still on the upper side."

The dollar reached its highest point on June 22 when it reached Rs211.93 before dropping to Rs207.23 on June 23, setting a new record for the most one-day loss of Rs4.70.

The enormous changes in the currency rate are a reflection of how drastically the political environment is shifting. The trade deficit for FY22 was above $48 billion, which increased the current account deficit to a risky level despite record-high inflows of remittances and export proceeds.

Numerous political groups have begun calling for new general elections in the wake of PTI's unexpected victory in the Punjab by-elections on Sunday.

The announcement that an agreement had been reached at the staff level with the IMF did not improve the mood on the market because the value of the local currency kept falling. The US dollar maintained total dominance during the entire fiscal year FY22, and FY23 is currently seeing a similar situation.

The State Bank's ability to make payments has been called into doubt in the financial sector due to the country's dwindling foreign exchange reserves, which has caused the market to lose faith in the ability of the nation to meet its external obligations, particularly the repayment of debt.

The open market price of the dollar was Rs. 216 as opposed to Rs. 211 from the previous session.