State Bank of Pakistan Denies Emergency Meeting Amid Historic Currency Drop
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State Bank of Pakistan Denies Emergency Meeting Amid Historic Currency Drop
In a bid to quell mounting concerns about the plummeting local currency, the State Bank of Pakistan (SBP) issued a statement on Friday, denying the existence of plans for an emergency meeting of the Monetary Policy Committee (MPC). As the Pakistani Rupee hit a historic low against the US dollar, the central bank sought to reassure the public, labeling recent reports as "completely baseless."
The local currency, on Thursday, saw a staggering decline of Rs1.09 against the US dollar in the interbank market, settling at Rs305.54. Meanwhile, in the open market, the exchange rate reached over Rs320 per dollar. This sharp depreciation in the value of the Rupee has sparked widespread concern and panic among investors and the general public alike.
The Pakistan Stock Exchange (PSX) bore the brunt of this economic turmoil, as the benchmark index experienced a severe drop of over 2% on Thursday. This significant decline in stock prices is attributed to growing fears about the deteriorating economic situation in the country.
Investors, fearing an impending economic crisis, began offloading their shares in response to the worsening Rupee-to-dollar exchange rate. This exodus from the stock market underscores the rising uncertainty that has gripped the economy.
As rumors circulated that the SBP would convene an emergency meeting of the MPC to address the Rupee's decline, the central bank moved swiftly to quash these speculations. The SBP emphasized that forecasting future policy rates prematurely would be inappropriate, as only the MPC—an independent statutory body—holds the authority to make such decisions.
"The next meeting of the MPC is scheduled to be held on September 14, 2023, during which it will take stock of the economic developments and take appropriate decisions," the SBP's statement clarified. This statement aims to reassure stakeholders and the public that the central bank remains committed to addressing the economic challenges through established channels.
This development comes on the heels of the SBP's decision on July 31 to maintain its key rate at 22%, a decision that surprised many. The International Monetary Fund (IMF) had advocated for further tightening to combat inflation, but the SBP opted for a status quo approach, expressing optimism that inflation would gradually decrease in the coming months.
In a climate of economic uncertainty and amid growing concerns about the Rupee's fall, all eyes are now on the upcoming MPC meeting in mid-September, where critical decisions about Pakistan's monetary policy will be made. The outcome of this meeting will undoubtedly have a significant impact on the country's economic future and the stability of its currency.
