Pakistani rupee has experienced a significant boost against the US dollar. This sudden surge has sparked hope among citizens and policymakers alike, as it may lead to a reduction in petroleum prices in the upcoming fortnight’s review, scheduled for September 30. Interim Information Minister Murtaza Solangi recently addressed the media at the Karachi Press Club, shedding light on the factors behind this unprecedented currency rebound.
Administrative Measures and Currency Stability
Minister Solangi attributed the rupee’s impressive gain, estimated to be between Rs30 to Rs35 against the US dollar, to the administrative measures undertaken by the interim government in the past few days. These measures primarily targeted hoarders, currency smugglers, and black marketeers, following a significant depreciation of the rupee, which had reached a historic low of Rs308 in the interbank market and exceeded Rs330 in the open market earlier in the month.
The crackdown initiated by the authorities has played a pivotal role in stabilizing the rupee’s value. As a result, it has rebounded to approximately 291.76 per dollar in the interbank market, marking its highest level since September 5. This surge amounts to a remarkable 5% or Rs15 gain and can be attributed to various factors, including increased dollar inflows from exporters and remittances, as well as efforts by the central bank to promote legal channels for foreign exchange transactions.
Prospects for Reduced Petroleum Prices
The Minister provided optimism to the public by hinting at the possibility of a reduction in petroleum prices during the next fuel price announcement. He clarified that the interim government does not directly control fuel prices, as they are linked to international oil rates. Nevertheless, he expressed confidence that the recent strengthening of the rupee would likely translate into benefits for the consumers, potentially leading to lower fuel costs.
In the previous fortnight’s review on September 16, fuel prices in Pakistan reached historic highs, with petrol prices surging by more than Rs26 and diesel prices by over Rs17 per litre. As of now, petrol is being sold at Rs331.1 per litre, while high-speed diesel is available at Rs329.19 per litre. The prospect of reduced fuel prices is undoubtedly a welcome development for the public, offering relief from the burden of high energy costs.
Chairman of the Exchange Companies Association of Pakistan (ECAP), Malik Bostan, highlighted the potential positive consequences of the government’s crackdown on hoarders, black marketeers, and currency smugglers. Bostan revealed that foreign exchange companies, which previously received approximately $5 million per day, are now witnessing a remarkable 200% increase, with daily inflows of $15 million. This surge can be attributed to the crackdown, which has effectively reduced the interbank and open market dollar rates.
Moreover, Bostan expressed optimism that if the crackdown continues, the US dollar could potentially fall below the Rs250 mark, further stabilizing the currency exchange market. He shed light on a concerning revelation – the existence of a nexus between black marketeers and certain banking staff. Substantial amounts of dollars were found concealed in bank lockers, and corrupt bank employees collaborated with black marketeers to engage in illegal trading of US dollars through hawala and hundi transactions.
The recent surge in the Pakistani rupee against the US dollar has injected a sense of optimism into the country’s economic landscape. As the government’s crackdown on illegal currency activities continues, there is hope for further stability and even more favorable exchange rates. The potential reduction in petroleum prices offers a glimmer of relief for consumers grappling with high energy costs. Overall, these developments are a testament to the resilience of Pakistan’s economy and the positive impact of proactive measures by the interim government.