KARACHI: The rupee continued its upward march against the US dollar as it gained another Rs1.16 in the interbank market on Monday.

The local currency recovered Rs12.42 or 5.35 per cent against the greenback in the last seven sessions.

The currency market is still not sure about the persistency in the current declining trend of the US dollar especially when the fundamentals have not changed. The foreign exchange reserves have been declining and the IMF inflow of $1.2bn has almost been consumed.

But Finance Minister Ishaq Dar in an interview with a private TV channel on Monday said that the rupee is under value and it should be below Rs200 against the dollar.

“The actual value of the Pakistani rupee is less than Rs200 against the US dollar and it will be brought down as it is currently undervalued,” Mr Dar said.

However, currency experts fear that any artificial exchange rate will ultimately hurt the economy as was witnessed when the same finance minister during his tenure up to 2018 brought down the rupee below Rs100. The cheaper dollar encouraged the importers which resulted in a huge trade gap and his government ended with an unprecedented $20bn current account deficit.

“Unless and until inflows from other credit sources increase, IMF relaxes its conditions, China and Paris Consortium agree for deferred payments of principal and interests due in a year, no fundamental change will come in the current situation,” said Atif Ahmed, a currency dealer in the interbank market.

The open market which reacted quickly in support of the rupee did not show a change in the dollar price on Monday. Exchange Companies Association of Pakistan reported the closing price at Rs230, unchanged from Sept 30.

Published in Dawn, October 4th, 2022