ISLAMABAD
Finance Minister Ishaq Dar said on Thursday that the government would appoint a new governor of the State Bank of Pakistan (SBP) by Thursday night, who would order an inquiry into the unprecedented three per cent depreciation in the Pak rupee against the US dollar.
The minister informed media after meeting the heads of two dozen domestic banks and financial institutions, deputy governor banking and head of treasury, SBP, who were summoned to attend an emergency meeting after the rupee witnessed a sharp fall against the dollar a day earlier in the interbank market, sending shock wave in the government, banking, and financial circles.
The finance secretary and chairman FBR also attended the meeting.
The minister said the largest single drop in the rupee’s value in nine years was the result of the communication gap between individuals and institutions.
“We have decided to appoint new governor SBP by tonight, and will get approval from Prime Minister as soon as he arrives back from the two-day official visit from Tajikistan,” he added.
However, he did not elaborate on the communication issue. The SBP of Pakistan is without a full-time head since April 28, when the tenure of last Governor Ashraf Wathra expired. The government made the Deputy Governor State Bank Riaz Raziuddin, acting governor for three months, the maximum legal timeframe for which the central bank could be kept without a governor.
When pressed to explain the communication gap, he said, “Nobody could claim the all-knowing, and nobody was expert enough to decide on his own about the important issues.”
The minister said that the current account deficit was to be bridged by the finance ministry and not by the central bank. “The new governor will order an inquiry and we will only know the facts then. We will determine who the beneficiaries were?” he added.
The minister said that the emergency meeting was called to know the reasons why rupee has made a single day fall of Rs 3.50 in the interbank market.
It was puzzling and perplexing for ‘us’ as it was thought that some elements have tried to take benefit of the political situation, he claimed.
However, it was known during the meeting that there was a communication gap between some individuals and institutions that led to the depreciation of Pak rupee.
“I am happy to inform you the market has already corrected itself before the meeting began,” Dar said. The pressure was only in the interbank market and even FOREX association called to report that they were not responsible for the depreciation.
The rupee had plunged 3.1 per cent in the opening hours of interbank trade on Wednesday, sparking a shortage of foreign currency in the open market. The dollar had risen to Rs108.50 by midday to close at Rs108.25. This was the largest single drop in the rupee’s value in nine years.
Contrary to finance minister’s claim that the dollar-rupee exchange rate would be determined by market forces, the President of National Bank of Pakistan Saeed Ahmad told journalists after the meeting that it was decided that the value of the dollar against the rupee would be maintained somewhere between Rs105 and Rs107.
