Shaukat Tarin Reveals the Real Reason Behind Rupee’s Record Depreciation

Speculation in the forex market is the biggest reason behind the unprecedented freefall of the Pakistani Rupee against the US Dollar, Adviser to the Prime Minister on Finance and Revenue, Shaukat Tarin, has claimed. Speaking with the media, Tarin said that the Pakistani Rupee has been devalued by an additional Rs. 8-10 due to speculative trading in the forex market. The real value of the Pakistani Rupee against the US Dollar should be around Rs. 165-167 as per the effective exchange rate. He added that the smuggling of US Dollars to Afghanistan in large quantities is another major factor behind the record depreciation of the Pakistani Rupee. The Finance Ministry has asked the State Bank of Pakistan (SBP) and Federal Investigation Agency (FIA) to take robust measures to tackle the speculation in the forex market and the smuggling of US Dollars to Afghanistan. The development comes after the Pakistani Rupee slid to a record low against the US Dollar in both the open market and inter-bank on Friday. At closure, the Pakistani Rupee was trading at Rs. 178 in the open market while the inter-bank rate stood at Rs.175.73. Regarding the ongoing negotiations with the International Monetary Fund (IMF), Tarin said that the Finance Ministry has negotiated with the international lender on much better terms this time when compared with the talks that were held earlier this year in March. The IMF will soon announce the resumption of its loan program with Pakistan while speculative trading will take a severe hit and the prevailing volatility in the forex market will end as soon as the program officially resumes. Tarin refused to disclose the terms agreed with the IMF for the resumption of its loan program, adding that the IMF has asked the Pakistani government to avoid official commentary on the current negotiations.