On Monday, the US dollar continued to surge against the Pakistani rupee in interbank transactions, as Pakistan experiences political turmoil stemming from a conflict between the Pakistan Democratic Movement (PDM) and the Pakistan Tehreek-e-Insaf (PTI) over the election of the Chief Minister of Punjab province.
According to forex dealers, the US dollar increased in value by Rs1.87 and traded at Rs230.24. They claimed that the commercial banks are selling dollars at Rs232 while in the open market, the greenback traded between Rs231 and Rs232.
The fourth consecutive day of the week saw the continuous decline of the rupee against the US dollar. By the end of the day on Friday, the value of the US dollar increased by Rs1.56, trading at Rs228.37. In the open market, the US dollar was traded between Rs229 and Rs230.
The forex dealers have further alleged that the banks are artificially inflating the value of the dollar. They claim that the banks are buying dollars at Rs229 and selling them in the open market for Rs231. This 11-rupee difference in the exchange rate is due to the “market-determined exchange rate system” in place. Under this system, the current account position, news stories, and domestic uncertainty all contribute to the daily currency fluctuations.
In an apparent attempt to play down the depreciation, the SBP said a “better measure” of the rupee’s strength is the real effective exchange rate, which takes into account the currencies in which Pakistan trades in inflation-adjusted terms.
