KARACHI: The rupee will likely remain stable in the upcoming week provided that the coalition government prevents any manipulation in the currency markets adhering to its policy of closely monitoring financial institutions.
The local unit, during the outgoing week, shattered all records and plunged to an all-time low of 298.93 in the interbank market.
However, the interbank market saw the rupee rate improving after the local currency made the highest-single day recovery in absolute terms — it gained 13.85 in a single day on Friday closing at 285.08.
The apparent reason given for an unprecedented low level of rupee against the greenback was the political situation, which went from bad to worst after former prime minister Irman Khan was arrested on Tuesday (May 9) in an alleged corruption case from court premises.
Following the arrest of Khan, the country plunged into violent protests as supporters of the Pakistan Tehreek-e-Insaf (PTI) chief took to the streets and resorted to violent acts, which according to analysts ed to a steep decline in the value of rupee against the dollar as the political crisis also has bearing on the economic front.
The rupee’s deprecation after Khan’s arrest was so much so that it peaked to Rs298.93 — the highest level in the country’s history.
On the other hand, currency dealers pointed out that bad political situation also contributed in the steep decline in the value of rupee, but the market players also took advantage of the situation and resorted to “speculative trading” to earn massively from the foreign currency trade.
Traders said that the government acted to check that kind of trading, which resulted in highest single-day recovery in the value of rupee, although the political situation has not improved and is still very hostile.
“It was government’s action, which brought down the dollar value, otherwise the political uncertainty is still there and there are no signs that it would be vanishing in the near future, said Zafar Paracha, Secretary General Exchange Companies Association of Pakistan (ECAP).
He said that the steep decline in the value of rupee on Wednesday and Thursday was manipulated, which triggered an action from the government and then market saw the dollar rate coming down to its actual level.
Paracha predicted that dollar-rupee parity might be stable in the upcoming week if the government kept its checks strong on the market to discourage the manipulators from taking the advantage the bad political situation in the country.
He was of the view that the rupee-dollar parity might remain stable even the rupee could appreciate slightly further if the government was able to keep a vigil eye. Paracha maintained that political crisis in the country didn’t end yet, so if the rupee-dollar parity is linked with it, then it would definitely go up; however, it was more to do with the “speculative trading”
