The dollar touched Rs153 in the open market on Tuesday.
This is its highest-ever rate against the rupee. It is being sold at Rs150.5 in the interbank market.
The dollar rose to Rs148 in the open market last week a day after Prime Minister Imran Khan took notice and told currency exchange dealers to lower the rate. It closed at Rs141.39 in the interbank market a day earlier.
In a message to currency exchange companies, he said action would be taken against people selling dollars at expensive rates. Following his announcement, the dollar dropped to Rs144. However, it went up again afterwards.
The rise comes shortly after Pakistan and the IMF signed a three-year deal for $6 billion.
One condition of the programme is having flexible exchange rates. This means the government should not intervene in the foreign currency market and let the forces of demand and supply decide the dollar’s rate against the rupee.
In the previous government, former finance minister Ishaq Dar had artificially inflated the rupee at a time when all currencies pegged against the dollar were depreciating. The dollar has already become 25% more expensive since December 2017, but experts say its rate may increase by another 5% to 10% under the IMF programme.
Forex Association of Pakistan President Malik Bostan told Amber Shamsi, the host of SAMAA TV’s programme Sawaal, that what happened to the dollar was exactly what was being predicted after the deal with IMF.
Since IMF has issued its press release [on the staff-level agreement with Pakistan], investors have taken the IMF conditions as negative, especially with regard to free float of the rupee against the dollar and increasing the interest rate, said Bostan.
This is what happens in a float market, he said, explaining that it was like the sea waves – it goes high and low depending on the conditions.