KARACHI: At 11 a.m. on Wednesday, the open market saw the Pakistani Rupee depreciates by 5.75% (or Rs14.5) to an all-time low of Rs252.5 against the US dollar.
The Pakistan Stock Exchange (PSX) increased by 1.87% (or 730 points) to 39,785 points at 11:39 a.m. thanks to the rupee’s decline.
After currency dealers unanimously agreed to quit artificially maintaining the rupee’s overpriced value at Rs238 against the US dollar for the time being, the rupee fell.
At roughly 11 a.m. today, according to Topline Securities CEO Muhammad Sohail, the rupee fell to Rs252.5 versus the dollar.
Up until Tuesday, currency dealers had control of it at Rs239.
“After exchange businesses opted to offer dollar rates close to market, the Karachi Stock Exchange (KSE) Index increased by 700 points, signaling that the government had agreed to the International Monetary Fund’s (IMF) recommendations that market forces should set the rupee-dollar parity.
Malik Bostan, president of the Exchange Companies Association of Pakistan, announced to the public after presiding over a special meeting on Tuesday, “We [currency dealers] have unanimously decided to remove the cap on the rupee-dollar exchange rate with effect from Wednesday.”
They already agreed to put cap on the exchange rate in order to provide foreign cash at discount. However, the experiment gave rise to the underground currency market.
The black market rate for local currency was between Rs250 and Rs260 per US dollar. In order to make money, people were buying dollars on the open market for Rs. 238 and selling them in cash for Rs. 250–260.
According to Boston, eliminating the cap in the open market would end the black market. This action would also boost entrants into legal markets. Furthermore, it will make money available to the general people for use in international travel, higher education, and healthcare.
