SBP asked to initiate inquiry into sharp deterioration of PKR-US$ exchange rate

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ISLAMABAD, Jul 9 (APP): Finance Division has officially asked
the Governor, State Bank of Pakistan (SBP), to initiate an inquiry
into the sharp deterioration of PKR-US$ exchange rate in the
interbank market on July 5 and to send a report in this regard
within a period of ten days.
The inquiry has been recommended by the Finance Minister,
Senator Mohammed Ishaq Dar, in his capacity as Chairman of Monetary
and Fiscal Policies Coordination Board, said a press release here.
It is mentioned here that, after concluding a meeting on this
matter with the Presidents/CEOs of Banks on 6th July 2017, the
Finance Minister held a press talk in which he conveyed that a
detailed inquiry will be held into the matter, and those responsible
will be held to account.
The PKR-US$ exchange rate in the interbank market
deteriorated by 3.1% from Rs 104.90 per US$ on 4th July 2017 to
Rs. 108.25 per US$ on 5th July 2017.
The sudden depreciation of PKR versus the US$ led to
speculation and anxiety in the foreign exchange market.
On the same day, i.e. July 5, 2017, the Finance Minister took immediate
notice and action on this matter.
He called for a detailed report from the State Bank of
Pakistan (SBP) on this artificial and unnatural deterioration in the
PKR-US$ exchange rate. He called an emergent meeting with
Presidents / CEOs of Banks on 6thJuly 2017.
The Finance Minister’s immediate notice and action resulted in
stabilization of Pak-US$ exchange rate in the interbank market to
Rs 105.50 per US$ on 6th July 2017 when the financial markets
opened.
It may be noted that, under the State Bank of Pakistan Act
1956, the Monetary and Fiscal Policies Coordination Board,
comprising of the Federal Minister for Finance (Chairman) and other
members, including Governor SBP and Finance Secretary, is
responsible for coordinating the exchange rate policy as well as the
fiscal and monetary policies, to ensure consistency among
macroeconomic targets.
However, the sharp deterioration of the exchange rate on
5th July 2017 occurred due to the fact that members of the Monetary
and Fiscal Policies Coordination Board, including the Finance
Minister and Finance Secretary, were not taken on-board on the
matter.