The US dollar fell to its lowest level in seven weeks after losing 0.73 paisas in the opening hours of interbank trading on Friday.
The dollar was trading at Rs157.50 in the interbank market after losing Rs1.7 against the rupee in the last five trading sessions. This is its lowest level since July 5.
The interbank rate is the benchmark rate to determine the value of the dollar and sets the direction for open market rates. Since the open market or cash market rate usually remains higher than the interbank rate, the open market is likely to follow a similar trend throughout the day. The dollar fell 0.40 paisa to Rs158.30 when trade stared in the open market today. The final rates for both the cash and interbank markets are compiled in the evening when business closes.
The foreign currency market remained uncertain, at times volatile, throughout the second half of 2018 and a similar trend was witnessed this year. Barring a few stints of stability, the dollar showed no signs of stabilizing. The rupee-dollar exchange rates became more volatile ahead of Pakistan’s formal entry to the IMF’s loan programme as the greenback rose sharply before falling again.
In the last week of June, the dollar had increased sharply to an all-time high of Rs164.2 against the rupee. Currently, the dollar is Rs6.75 cheaper than its peak rate.
Both traders and end users have been closely monitoring dollar rates since the present government’s started its term in August 2018. The dollar was trading at Rs124 when the PTI government was sworn in, but rose by more than 27% to its current value since then.
“We will keep a close eye on its [dollar] movement and intervene to avoid any speculative movement and volatility,” Dr Reza Baqir, the governor of the State Bank, said in a press conference last month, terming the policy to be a ‘market-based exchange rate system’.
The governor also said that whatever adjustment was needed in the exchange rate to fix the economic imbalances of the past had taken place already. Since his statement, the dollar has remained stable around the Rs160 level before falling gradually to its current level in the last few days.