The value of Rupee against the dollar is worsening. On Tuesday Pakistani Rupee hovered around Rs 130.5 against the dollar. Uncertainty leads to the belief that the Rupee will further devalue with time.
Just on Monday the rupee devalued by 5.3% in the inter-bank, reaching Rs128 at close on Monday. The stakeholders and currency dealers fear that the situation will just aggravate.
State Bank of Pakistan’s decision to increase the key interest rate by 100 basis points to 7.5% the rupee was trading around Rs 125 in the inter-bank market. On Friday the value of rupee against the dollar was Rs121.55/. As the State Bank devalued rupee by 5.3% on Monday, leading to a decline by Rs0.5 on Tuesday, the Pakistani rupee reached Rs128.5 against the US dollar.
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In the past 7 months, the State Bank has allowed the rupee to fall by 22%.
Pakistan Forex Association President Malik Bostan said, “The open market trade was affected as buyers and sellers have resorted to staying on the sidelines for clarity on the rupee-dollar parity.”
Adding. “The sale of dollars was cut to one-fourth at around $1 million (on Tuesday) compared to the usual demand of around $4 million a day in the open market.”
Bostan said, “Speculations regarding further devaluation have also convinced sellers to sit on the fence.”
The devaluation of the rupee against the dollar will negatively affect the economy of the country. Chances are that petrol prices will increase for the month of August following the devaluation of rupee against the dollar. Everytime Pakistani rupee’s value has declined, fuel prices have increased and the automakers have further raised the car prices, making life terrible for the consumers.