KARACHI: As Pakistan’s economic woes remain far from being addressed, its currency plunged to new lows against the dollar on Thursday while the gold price saw a historic single-day rise of Rs10,500 per tola or Rs9,003 per 10 grams thanks to a $29 per ounce jump on world markets.

Meanwhile, the rupee lost anot­her Rs3.92 on a day-on-day basis to hit an all-time low at Rs239.94 amid strong demand from importers.

The dollar’s appreciation continued as the State Bank of Pakistan (SBP) and the government didn’t intervene to rescue the local currency.

The currency market did not take the assurances given by Finance Minister Miftah Ismail seriously as the PMLN-led coalition government has engaged the IMF from the very first day after coming to power but couldn’t secure the release of a $1.17bn tranche so far even after reaching a staff-level agreement on July 14. The Fund’s executive board is expected to approve the tranche in its meeting likely to be held anytime in August.

Rupee plunges to 239.94 amid a dearth of dollar inflows

State Bank of Pakistan acting Governor Murtaza Syed in an interview with a foreign newspaper said that Pakistan’s economic problems are overblown. However, the speed of devaluation of the local currency reflects the gravity of the situation particularly when foreign exchange reserves are declining and inflows are not there.

The dollar price rose to Rs244 on Thursday in the open market from the previous close of Rs241.

It was also noted that a grey market has appeared and the currency is easily available at a higher price than the quoted prices in the licensed market. One can buy dollars at Rs4 to Rs6 per dollar higher than the open market rates.

Gold rally

The one-tola and 10-gram rates soared to record Rs162,500 and Rs139,318, respectively.

In view of the persistent bullish trend on the world markets coupled with record rupee devaluation, All Sindh Saraf and Jewellers Associ­ation (ASSJA) had first issued the rate in the evening with a jump of Rs8,500 per tola and Rs7,288 per 10 grams after a rise of $19 per ounce. Just after three minutes, the association further raised the rates by Rs2,000 per tola and Rs1,715 per 10 grams, based on a further increase of $10 per ounce to $1,750.

This calendar year, the per-tola and 10-gram prices of gold surged by Rs36,300 and Rs31,122, respectively.

The previous highest single-day increase was recorded at Rs3,000-4,000, but today’s jump has so far been unbelievable at a time when the marriage season is at its peak, said All Pakistan Jewellers Manufa­cturers Association chairman Mohammad Arshad.

He said a 22-karat three-gram gold ring now costs Rs35,000 while a 10-gram chain is being sold at Rs140,000 which can only be afforded by filthy rich people.

He said the extraordinary increase in gold rates usually lured investors who lift five to 10 tola gold bars for investment purposes and cash them at a suitable time.

As per data from the Pakistan Bureau of Statistics (PBS), the country’s gold imports rose by 145pc in value to 363kg in FY22 valuing $22.6m versus 148kg amounting to $9m in FY21. Jewellery exports went up by 4.5pc to $14m in FY22 from $13.7m in FY21.

SBP reserves fall $754m

The foreign exchange reserves of the State Bank of Pakistan (SBP) further declined by $754m to $8.575bn due to debt repayments during the week ended on July 22.

The holdings of the commercial banks during the week were $5.839bn while the country’s overall reserves fell to $14.414bn.

Published in Dawn, July 29th, 2022