Experts Predict End of Rupee Depreciation and Analyze Impact of Rising Dollar Value

Pakistan's local currency, the rupee, suddenly depreciated against the US dollar on Thursday, just two days after Pakistan's foreign exchange companies announced they were lifting the cap on the dollar. At the close of business on Thursday, the price of one dollar increased by about Rs 25 to close at Rs 255, which is a new record for depreciation of the rupee in a day.

This increase in the value of the dollar comes at a time when Pakistan is facing an economic crisis, with foreign exchange reserves falling below four billion dollars. The government is currently seeking assistance from the International Monetary Fund (IMF) to deal with the crisis.

Analysts believe that the depreciation of the rupee is evidence that the government has abandoned its policy of keeping the rate fixed against the dollar and has now accepted the IMF's condition that talks with the IMF continue in order to be successful.

There are fears in Pakistan about how deep the rupee's devaluation will impact the economy and the common man, and whether the rupee's value can be restored. Uzair Yunus, the director of the Pakistan Initiative at the Atlantic Council think tank, says that the change in the inter-bank rate of the dollar is a clear proof that the government has abandoned the policy of Ishaq Dar, which was the demand of the IMF.

Sana Tawfiq, the Lead Economist and Senior Analyst at Arif Habib Securities Limited, agrees with Uzair Yunus, stating that it was necessary to fulfill some conditions of the IMF, one of which was currency adjustment. He adds that over the past few years, there was no significant change in the value of the rupee against the dollar, although the country's foreign exchange reserves were dwindling and remittances declined, which was a sign that the currency was being managed.

Ayesha Khan, an economic analyst and Regional Managing Director of Acumen Fund, said, "We are currently going through the worst instability in Pakistan's history and the government does not seem to have any strategy in this regard." The devaluation of the rupee will have negative effects on the economy, as it will increase pressure on importers and lead to higher inflation. Uzair Yunus estimates that inflation will increase by about 35% as a result of the record depreciation of the rupee.

In conclusion, Pakistan's economic crisis and the sudden depreciation of the rupee against the dollar are a cause for concern, and it remains to be seen how the government will address the situation and whether the rupee's value can be restored. However, analysts believe that the government's willingness to accept the conditions of the IMF may be a step in the right direction.