KARACHI: The interbank market witnessed “volatility” in the morning trading as the US dollar recorded a sharp decline before recovery within an hour, a forex trader said on Wednesday.
“The rupee opened at 201.50 today and dropped to 199.40, quickly recovered within 30 minutes to trade in 201.20,” Secretary-General of the Exchange Companies Association of Pakistan (ECAP) Zafar Paracha said in a statement.
“There is no sense in this flexibility. This creates instability in the market, and undermines the confidence of foreign buyers, exporters, and foreign investors, ”he added.
The local unit was selling at 202.5 against the US dollar at 1:20 pm, according to Geo News. It ended at 202.83 the day before.
According to traders and analysts, the rupee fell sharply on Tuesday, weighed down by imports, foreign debt, and restitution.
AA Commodities Director Adnan Agar said the market situation was deteriorating due to uncertainty about the ongoing financial crisis.
The analyst added that the market is volatile as investors respond to all developments regarding the future budget, the International Monetary Fund (IMF) program, and other economic indicators.
“Investors are concerned about the economic situation and the delay in decisions in the new coalition government,” he said.
Agar added that the currency is expected to remain flexible as oil prices rise in the international market at the moment, and the government is expected to raise taxes on the organization’s next budget for the next 2022-23 financial year which will boost inflation.
The analyst also pointed out that the price of petrol is expected to increase to Rs250-260 a liter, which will negatively impact the value of the dollar.