US dollar soars to Rs138 in interbank market

KARACHI, Oct 09 (INP): The US dollar historical soared to Rs138 in the interbank market on Tuesday following the value of the dollar shot up Rs11.70 in the market.

According to analysts, the rapid increase in the dollar is owing the government’s decision to approach the International Monetary Fund (IMF) to deal with the prevalent financial crisis.

Finance Minister Asad Umar in a video message on Monday night said talks with the IMF will start “immediately” as Prime Minister Imran Khan has given a go-ahead to do so. He said the country is going through a tough time, which has been left behind by the previous government. “We have to find a way to get out of this difficult situation.”

Sources within the Ministry of Finance informed a private TV channel that the IMF would demand Pakistan to reduce its non-development expenses to bring down budget deficit. They said the world organisation will also ask Islamabad to expand tax net in the country. The dollar has been on an appreciating trend, reaching Rs124.30 in the interbank market on Oct 5, with rates in the open market reaching Rs127.80 on Saturday. The interbank rate on Tuesday rested at Rs124 as the market opened, rose to Rs138, then dipped slightly to Rs133. For the past few days, the open market rate of the US dollar has been Rs4-5 higher than the interbank rate. The open market rate is Rs134 to Rs135 today, according to General Exchange Companies Association of Pakistan Secretary Zafar Paracha. Currency dealers fear the alarming increase will fan panic in the market for dollars, causing a buying frenzy for the US dollar. They speculate that the sudden increase in the price of the USD could be a result of rupee devaluation — the fifth time since Dec 2017 — by the State Bank of Pakistan (SBP) in order to secure a bailout package from the International Monetary Fund (IMF). The Fund has demanded the government devalue the rupee by at least 15 per cent. Market analyst Muzammil Aslam, said that once Pakistan would receive funds from the IMF, the economy would stabilise. “I don’t think it will go up to Rs150, the government won’t allow the economy to spin out of control,” he added. Senior Pakistan Tehreek-i-Insaf (PTI) leader Ali Zaidi said that the jump in the exchange rate would “affect everyone, even us ministers”. “But just bear with it for a while and everything will fall into place,” he said. INP/LK