Gold price crosses Rs200,000 as rupee loses more ground against dollar

News Desk
Saturday, Jan 28, 2023


KARACHI: Gold price continued to make and break records on Friday as it surpassed the major Rs200,000 per tola threshold for the first time in the history of Pakistan, while rupee extended its downward trend with the local currency plunging Rs7.17, or 2.73 per cent, against the US dollar in the interbank market.

Data released by the All-Pakistan Sarafa Gems and Jewellers Association (APSGJA) showed that the price of gold (24 carats) soared by Rs7,000 per tola and Rs6,000 per 10 grams to settle at Rs202,500 per tola and Rs173,610 per 10 grams, respectively.

Goldsmiths, who were already eyeing the 200,000 per tola rate since the current price hike spree, cited record-breaking rupee devaluation and a steep decline in the foreign exchange reserves in the country as major factors contributing towards the massive price hike in the bullion market.

Meanwhile, the rupee extended its downward trend on Friday with the local currency plunging Rs7.17, or 2.73 per cent, against the US dollar in the interbank market as the government eased its control over the currency in order to convince the International Monetary Fund (IMF) to release pending loan tranche.

The local unit recovered slightly by day end as it closed at an all-time low of Rs262.60 after dropping to 268 during intra-day trade. A day earlier, the rupee settled at Rs255.43 in the interbank market following a single-day highest decline of over 9 per cent. The greenback has gained Rs31.28 in the interbank market since Thursday as forex companies removed a cap on the exchange rate — a key demand of the IMF as part of a bailout programme agreed upon in 2019.

The rupee fell to 265 to the dollar in the open market, a decline of Rs3 compared to the day before, according to the rates provided by the Exchange Companies Association of Pakistan (ECAP).

A market-driven currency rate is one of the key requirements the IMF has set for restarting the stalled bailout programme. Attempts by Finance Minister Ishaq Dar to defend the rupee since his appointment in September, including reported currency market interventions, had run counter to the IMF’s advice.

A day earlier, the rupee shed 24.11 in the interbank market, falling as low as 255.43 to the dollar. The 9.6 per cent decline was the second-biggest drop in a single session.

The previous low of Rs239.94 was recorded on July 28, 2022, when Pakistan’s long-struggling economy was further weakened by political chaos and devastating floods.

Facing an acute balance of payments crisis, Pakistan is desperate to secure external financing, with less than three weeks’ worth of import cover in its foreign exchange reserves, which fell $923 million to $3.68 billion in the latest data.

Pakistan secured a $6 billion IMF bailout in 2019. It was topped up with another $1 billion last year to help the country following devastating floods, but the IMF then suspended disbursements in November due to Pakistan’s failure to make more progress on fiscal consolidation.

According to the State Bank of Pakistan, the price of the euro appreciated by Rs6.77 and closed at Rs285.60 against the previous day’s closing of Rs278.83.

The Japanese yen increased by 04 paisa to close at Rs2.01, whereas an increase of Rs8.24 was witnessed in the exchange rate of the British pound, which was traded at Rs324.84 as compared to its last closing of Rs316.60.

The exchange rates of the Emirates dirham and Saudi riyal increased by 95 paisa and 91 paisa to close at Rs71.49 and Rs69.95, respectively.