KARACHI: Following the removal of the unofficial cap on the greenback, the rupee fell further against the dollar on Wednesday, depreciating almost 1%.
The rupee closed at 243 against the dollar, falling 2.25 or 0.92%, the Exchange Companies Association of Pakistan (ECPA) said in a statement, compared with a range of 237.75-240 at the close on Tuesday.
In the interbank market, according to the State Bank of Pakistan (SBP), the greenback closed at 230.89 and lost 0.58 or 0.21% of its value, compared with Tuesday’s close of 230.40.
The move towards a market-based exchange rate should please the International Monetary Fund (IMF), as that is one of the conditions that the multilateral lender has set before it agrees to unlock a stalled bail-out programme for Pakistan.
Finance Minister Ishaq Dar’s attempts to defend the rupee, including currency market intervention, had run counter to the IMF’s advice.
Battling the highest inflation in decades, the central bank has raised interest rates sharply, but the country has barely enough foreign exchange reserves to cover three weeks of imports and is struggling to meet its external financing obligations.
The ECAP said late on Tuesday it was lifting the cap on the currency in the interest of the country.
Before the cap on the rupee was removed, markets eyed three different rates to assess its value — the state bank’s official rate, the one assessed by the foreign exchange companies and the black market rate.
