Pak rupee continues
to lose ground, closes
at 233 in interbank,
gold also record high

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KARACHI: The rupee continued to lose its value on Tuesday, closing near an all-time low of 233 against the dollar in the interbank market.

The local currency, which had closed at Rs229.88 yesterday, fell Rs3.05 to close at Rs232.93 today, according to the State Bank of Pakistan (SBP). This amounts to a depreciation of 1.31 per cent.

Mettis Global Director Saad Bin Naseer said the rupee hit a new intraday low due to letter of credit (LC) payments for oil at a time when the SBP was reluctant to release reserves to contain the exchange rate volatility.

“Furthermore, exporters seem more interested in earning windfall profits as they seem to have abandoned national interest in view of gaining quick earnings from rupee depreciation,” he told Dawn.com.

On the other hand, Naseer pointed out, exporters were utilising maximum LC limits from banks.

“Any bank will tell you that exporters are currently using maximum limits for import LCs whereas they refuse to bring in dollar from export earnings.”

He said that the only way for the government to address the situation was to mandate exporters to convert their transactions at the time of export so they could not continue holding on to the dollars.

“At the same time, the SBP can serve as an intermediary by doing swaps with banks so that the exchange rate can remain insulated from foul play of exporters at a time of crisis.”

He said that exporters should focus on earning from the sale of their goods instead of fleecing the exchange rate.

Gold at all-time high

Prices of 10-gram and one-tola gold reached an all-time high of Rs127,143 and Rs148,300 in the local market on Monday, showing a jump of Rs1,714 and Rs2,000 respectively.

Rates issued by the All Sindh Saraf Jewellers Association (ASSJA) mentioned a rise of only $2 per ounce to $1,730. But the domestic rates have been adjusted upwards owing to a record fall in the rupee’s value against the dollar, which traded at Rs229.88 in the interbank market on Monday.

On January 1, 2022, prices of 24-karat 10-gram and one-tola gold were Rs108,196 and Rs126,200, respectively, based on the world bullion rate of $1,830 per ounce. One dollar at the time was equal to Rs177.

Gold traders have threatened to close down their businesses and stage a sit-in following the government’s decision to impose a fixed income and sales tax of Rs40,000 on those retailers that have shops of 300 square feet or less irrespective of their electricity consumption, location and business size.

ASSJA President Haji Haroon Rasheed Chand said the fixed tax has created uncertainty among gold jewellers.

He said the threshold of 1,000 square feet of shop space has been maintained for general retailers. All general retailers, other than those belonging to Tier-1, will pay reduced fixed charges at Rs3,000-Rs10,000 as per their electricity consumption.