ISLAMABAD - Dollar value has reached the highest level in history as in open market it was selling above 108 rupees on Tuesday and economists feared that Pakistani rupee would remain under pressure in near term.

Market sources said that dollar rate has increased to Rs 108.1 in open market and Rs 106.25 in interbank. The dollar, which was around Rs 100 when Pakistan Muslim League-Nawaz (PML-N) took the charge of the government on June 5, is continuing its upward journey since last few months. There are different viewpoints on increasing dollar value, as some people are of the view that the government has made commitment with IMF to enhance dollar value while others believed that rupee is under pressure due to ‘speculations’.

However, finance ministry officials blamed speculations for the devaluation and said Pakistani rupee is likely to stabilize in near term, as government has finalized loan proposals of $625 million from private commercial banks to build the foreign exchange reserves. But economists believed that rupee would remain under pressure due to one or the other reason.

When contacted, renowned economist Dr Ashfaque Hassan Khan, who is currently serving as Dean NUST Business School (NBS), said that Pakistani rupee would remain under pressure owing to the IMF programme. He further said that government is acting desperately for dollars that is creating panic in market. “SBP has been asked to purchase foreign exchange from the inter-bank market, as in prior action, the SBP has purchased $125 million during two months of July and August”, he added. Dr Khan informed that limited purchase of dollars has destabilized the exchange market and the rupee lost its value.

Talking about loan proposals of $625 million from private commercial banks, he said this creates panic in the market and dollar reached Rs 108.1 in open market and Rs 106.25 in interbank.

Saqib Sherani, former advisor to finance ministry, has said that there are several reasons behind soaring dollar value against rupee that included speculations, repayment to IMF and central bank’s buying dollar from interbank. He was of the view that rupee would remain under pressure as Pakistan has to make huge repayment to IMF during the next few months.

Sherani further said that government’s $625 million loan arrangement with banks could provide temporary relief to the Pakistani rupee. “The gap is very wide, which can be filled through major inflow”, he added.

Dr Usman Mustafa from Pakistan Institute of Development Economic (PIDE) has termed the soaring dollar value against rupee a result of ‘hidden agreement’ with IMF. Talking to The Nation he said, “There are also several other reasons behind increasing dollar value against Pakistani rupee that included twin deficits (current account and fiscal deficits), repayment to IMF, investment in dollar against gold and upcoming Haj season”.

He informed that State Bank of Pakistan (SBP) had intervened in open market by controlling the dollar value to curtail its demand in past, which now has become silent spectator. He was of the view that IMF has asked the SBP to stay away from open market. Dr Usman noted that investors are now investing in dollar against gold, as gold prices are fluctuating.

Talking about the inflow of dollars, the said that situation would improve due to loan proposals of $ 625 million through private commercial banks, foreign and local, bringing resources. “The economic situation in general and rupee value in particular can improve with inflows of dollars in the country”, he concluded.

Dr Kaiser Bangali, eminent economist and former advisor to Chief Minister Sindh on planning and development, said that there is no short term solution to control the rupee deprecation against US dollar. “Rupee will remain under pressure when country’s imports enhance than exports”, he said and added that government should control its imports by using alternative measures.