The USD closed in the interbank at Rs255.43, after an increase of 10.6 per cent. The rate in the open market fluctuated between Rs257 and Rs260. The move to remove all restrictions on the exchange rate shocked currency dealers. As Pakistan’s forex reserves reached dangerously low levels, the de-capping was intended to generate liquidity. The last major single-day movement in the USD-PKR exchange rate was witnessed in Oct 2018, when the rupee slid by 7pc against the dollar.
The depreciation five years ago came at the back of similar economic challenges on the external front. The SBP had allowed this depreciation to make imports expensive and incentivise exports. The devaluation could increase diesel prices by Rs50 per litre, with GST at zero.
