KARACHI: The Pakistan Rupee (PKR) made a massive gain of Rs5.25 to the dollar during past two trading sessions due to sharp increase in key policy rate by 2.5 per cent.
The rupee ended Rs182.93 to the dollar from last Friday’s closing of Rs184.68 in the interbank foreign exchange market.
READ MORE: Rupee rebounds sharply on massive interest rate hike
The local currency recorded all- time low against the dollar at Rs188.18 to the dollar on April 07, 2022.
The SBP on April 07, 2022 announced monetary policy in an unscheduled meeting and surprisingly increased the key policy rate by 250 basis points to 12.25 per cent.
The SBP noted that the recent developments necessitated a strong and proactive policy response.
Accordingly, the Monetary Policy Committee (MPC) decided at its emergency meeting today, to raise the policy rate by 250 basis points to 12.25 percent.
READ MORE: PKR witnesses record single day fall to dollar
This increases forward-looking real interest rates (defined as the policy rate less expected inflation) to mildly positive territory. The MPC was of the view that this action would help to safeguard external and price stability.
READ MORE: Dollar tops PKR 186.13 at interbank closing
The MPC also noted that SBP is in the process of taking further actions to reduce pressures on inflation and the current account, namely an increase in the interest rate on the export refinance scheme (EFS) and widening the set of import items subject to cash margin requirements. These items are mostly finished goods including luxury items and exclude raw materials.
The announcement of these measures is expected soon and will complement the action taken by the MPC on interest rates.
READ MORE: Dollar continues record spree against PKR; hits 185.23
