Rupee records massive gain against US dollar as political uncertainty fades
Dollar rate registers massive fall of over rupees three against Pakistani currency
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With the landmark Supreme Court ruling last night which cleared the air regarding political uncertainty in the country continued for days, the battered Pakistani rupee invigorated considerably after gaining massively in the interbank trade, reported 24NewsHD TV channel.
On Thursday ahead of the SC ruling that was supposed to end the standoff between Prime Minister Imran Khan and opposition, the greenback muscled past triple historic barriers during the interbank trading. The US dollar first soared past historic Rs187 barrier in a flash and then bulldozed Rs188 barrier and later notched up to Rs189 mark, scoring a historic gain of two rupees and 87 paisas.
The State Bank too raised its policy rate by 250 basis points to 12.25% - the biggest hike in years - in an emergency meeting on Thursday, citing a deterioration in the outlook for inflation and an increase in risks to external stability, heightened by the Russia-Ukraine conflict, as well as domestic political uncertainty.
The SBP was scheduled to meet later this month but the poor economic conditions compelled the bank to chip in and hold monetary policy committee (MPC) meeting to take measures to safeguard external and price stability.
In its statement, the SBP said that "Since the last MPC meeting, the outlook for inflation has deteriorated and risks to external stability have risen.”
The bank further stated: “Heightened domestic political uncertainty contributed to a 5 percent depreciation in the rupee and a sharp rise in domestic secondary market yields as well as Pakistan’s Eurobond yields and CDS spreads since the last MPC meeting.”
Pakistan also saw a sharp dip in its foreign currency reserves as reserves held by the central bank dropped by $728 million to $11.3 billion by April 1, compared with $16.2 billion on March 4.
The country’s economic policymakers wanted to see the political crisis resolved as quickly as possible. As Pakistan is in the middle of an International Monetary Fund bailout which it desperately needs to shore up hard currency reserves.
Opposition leader Shehbaz Sharif, who is all set to defeat Prime Minister Imran Khan in tomorrow’s no-confidence motion in National Assembly, was apprehensive of an economic disaster. In his tweet on Thursday, he warned as dollar continued to soar, a massive economic meltdown was staring the country in the face.
As dollar continues to soar, a massive economic meltdown is staring the country in the face. No wonder Niazi is running away after leaving a legacy of broken economy, constitutional crisis & political instability. Pakistan did not deserve it.. Time to right all the wrongs is NOW!— Shehbaz Sharif (@CMShehbaz) April 7, 2022
Reporter Ashraf Khan