The Pakistani rupee experienced a significant surge in its value in the open market against the dollar on Thursday, following a recent directive from the State Bank of Pakistan (SBP). The directive allowed banks to purchase dollars at the interbank market rate to settle international card payments, aiming to minimize the exchange rate disparity between the official and curb markets.
According to the Exchange Companies Association of Pakistan, the dollar was being traded at Rs300 in the currency market, marking a decrease from the previous day’s closing rate of 311.
The SBP’s decision came in response to the International Monetary Fund’s requirement for Pakistan to stabilize its currency market before resuming a $6.5 billion bailout program.
The central bank stated in its circular, “In view of the representations received from stakeholders, it has been decided to allow Authorized Dealers to purchase USD from Interbank for settlement of card-based cross-border transactions with IPS [international payment schemes].”
Analysts had predicted a decline in the value of the rupee following the implementation of these new guidelines.
Zafar Paracha, the General Secretary of the Exchange Companies Association of Pakistan, praised the SBP’s timely decision, expecting a reduction of 20 to 25 rupees in the open market currency rate. He also emphasized that the convergence of rates between the official and curb markets would contribute to increased remittance inflows.
Paracha further highlighted that a significant disparity in rates between the official and curb markets tends to encourage transactions outside of the regulated banking system.
The surge in the value of the Pakistani rupee against the dollar in the open market, driven by the SBP’s directive, has been met with optimism as it aims to bridge the gap between various currency markets and promote stability in the economy.