The rupee plunged by 3.1 per cent in the opening hours of interbank trade on Wednesday, sparking a shortage of foreign currency in the open market as dealers preferred to hold rather than sell. By midday the dollar had risen to Rs108.50 before settling at Rs108.25 by close. This is the largest single drop in the currency in nine years, according to Bloomberg, and there is no clarity on how far it might go in the days ahead.
Deliberate or not, the rupee slide, as dramatic as it was, stood for just one day. By Thursday, it was trading at a more ‘acceptable’ Rs105.7 to the US dollar. But it happened only after the country’s finance minister called an emergency meeting, discussed the situation and then met some more officials on Thursday to bring some recovery to the rupee.
The State Bank of Pakistan (SBP) held its silence during the day as the slide continued unabated, but later it came up with a press release owning the move, saying it had become necessary due to a growing deficit in the external account. “The exchange rate adjusted in the market and the SBP is of the view that this depreciation in the exchange rate will address the emerging imbalance in the external account and strengthen the growth prospects of the country,” said the SBP.
But the finance minister described the move as “artificial” and then during his news conference on Thursday, added that it was the result of “miscommunication between a few individuals”. What is surprising is that the currency value dipped after being stable for almost three straight years.
SBP statement contradicts with the statement of finance minister; SBP is not about some officials, if the rupee depreciation was result of error of some individuals than why it was owned by SBP. Fact is this was an engineered event, and we need to know who the engineer was. At the moment real culprits are not identified and the author of the whole drama remains anonymous. But surely this fiasco has massively affected the economy of the country.
Fact is this was an engineered event, but author of the whole drama remains anonymous.