Dollar rate breaks four-year record, reaches Rs111 in interbank market

KARACHI: The rate of the US dollar broke its last highest record on Tuesday as it reached Rs111 in the interbank market. 

According to forex dealers, the dollar rate increased by Rs2.75 in the interbank market, crosses its peak of Rs110.50 that occurred in September 25, 2013.

Economist Mohammad Sohail told Geo News that the reason behind the increase is the country's high import bill, adding that the former finance minister had unnaturally restricted the rate at Rs105.50. 

The rate of the US dollar has been increasing since the past week, with the value touching Rs110 on Monday before coming back down. 

The US dollar saw an increase of Rs3 Monday morning, climbing to Rs110 in the interbank market as volatility persisted.

On Friday, the US dollar had increased by Rs4.5 in the interbank market and Rs1.5 in the open market, catching the market by surprise, especially since the State Bank had announced on Thursday that it had received $2.5 billion earned from the recent issuance of euro and sukuk bonds.

Pakistan recently raised $1 billion in a five-year Sukuk and $1.5 billion in ten-year Eurobond transactions.

Normally when supply increases, like it did last week, the market stabilises as the balance of payments increases.

However, analysts said that the current account deficit and related factors were building pressure on the economy which resulted in the deteriorate in the rupee against the dollar.

Economist Muzammil Aslam told Geo News earlier that an increase in the dollar rate leads to a rise in prices of food items, petrol and services.

He said that a positive aspect of the increase in the dollar rate is that the country's exports, which have dipped in the past several years, can increase along with the country's industrial output.

Aslam added that the recent climb of the dollar could also be a result of the delayed devaluation of the Pakistani rupee, which has been delayed for over a year.