The rupee fell by Rs1.68 against the dollar during early trade in the interbank market on Tuesday, data shared by the Forex Association of Pakistan (FAP) showed.

The local currency was being traded at Rs231.5 per dollar by 11:45am, down 0.73 per cent from yesterday’s close of Rs229.82.

Separately, the PKR was changing hands at Rs240-242 per dollar in the open market at the same time.

FAP Chairman Malik Bostan said there was pressure on the import bill because of the floods, as a result of which the demand for dollars was rising. “Crops of cotton and wheat will be reduced this year which can increase the import bill and disrupt the balance of payments.”

The pressure could remain till friendly countries gave the $4 billion they had promised prior to the deal with the International Monetary Fund, he said.

Bostan said that if the condition of declaring foreign currency for incoming passengers was not removed, it could widen the difference in rates between the open and interbank markets. “The Ministry of Finance will need to address our concerns,” he added.

Former president of the Karachi Chamber of Commerce and Industry (KCCI) Abdullah Zaki also said the rupee’s value was declining in the aftermath of the floods.

Talking about the issues businessmen were facing, he said dollar rates were changing every day. “How can import be feasible [in these conditions]? If the exchange rate is not fixed, inflation can increase further.

“If our costs increase, we will pass them on to the consumers,” he said.

Zaki complained that commercial banks were opening letters of credit (LCs) after much difficulty. “We fear that if the hurdles in opening LCs are not removed, then the import of raw material needed for the export industry will be stopped.

“As a result, there will difficulty in completing export orders.”

The former KCCI president called on Finance Minister Miftah Ismail to “immediately” consult stakeholders and form a concrete policy to stabilise the exchange rate and end uncertainty.

The rupee has been losing ground against the dollar since Sept 2. It fell by Rs9.2 during the last week to close at Rs228.18. In the opening session this week, the rupee lost another 1.64.

Categorized in: