Dollar continues to set records, closing more than Rs207
According to the Forex Association of Pakistan (FAP), the greenback cost R1.45 from the close of the previous day of Rs206.40 and rose to Rs207.85 during the closing period. On Wednesday, he earned R1.30.
In the open market, the dollar was trading at Rs208.5 today.
Asad Rizvi, former head of treasurer at Chase Manhattan Bank, described the sharp decline in foreign currency as a major reason for the rupee. "The urgent thing is to get the house ready according to the IMF."
During the week ending June 3, Pakistan's State Bank liquidity foreign exchange reserves fell by $ 497 million to $ 9.2 billion.
He noted that the government's measures to increase the price of petrol, electricity and gas were inadequate. "Strict measures will need to be taken to eliminate subsidies, reduce shortages, and introduce additional taxes."
Rizvi also highlighted the need to address minor issues such as the 9 per cent tax on the GDP ratio, the 79 per cent GOP Holdings, and the 53 per cent early deposit to get the economy back on track.
On the other hand, Treasury head of research Komal Mansoor said the market would remain volatile until the IMF agreement was finalized. "That will also open up more multilateral flow."
"It looks like the rupee could be below the Rs210 level as many traders are eager to look forward now," he predicted.
Meanwhile, on Wednesday, the government increased fuel prices by up to 29 percent, removing fuel subsidies in an effort to alleviate the financial crisis and gain key IMF support. The plan calls on Pakistan to take drastic measures to control its deficit in the face of a payment crisis.
At a press conference last night, Finance Minister Miftah Ismail said rising prices were inevitable "to save the country from automatic behavior". He regrets that the decision has become inevitable because of the previous government's "unreasonable decision" to suspend prices.
Ismail pointed out that global crude oil prices were moving at around $ 85-90 a barrel when the previous government decided to withdraw from a recently concluded agreement with the IMF on tax cuts and price reductions. This was despite the fact that he had promised in writing that he would charge a petroleum development tax of Rs30 per liter and a sales tax of 17pc on the whole price, which is an average tax of Rs64 per liter.
International prices now exceed $ 120 a barrel and commodity oil prices also exceed 300-400pc. The minister said the loss of fuel had resulted in a monthly loss of R120 billion to the government compared to the Rs42bn spent monthly to run the entire government. "I have never seen so much damage to the economy in the last 30 years."
The previous government did not sign contracts where oil and gas prices were at $ 6 or create buffers during difficult times, he added.
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