The war on crude oil price wages on, consequently impacting the exchange rate in Pakistan. This Monday, the value of the US dollar rose by Rs 1.76 Pakistani rupees in the open market.
Dollar Rises Against Pakistani Rupee!
Details enumerate that the greenback’s value surged, consequently resulting from the recent stock market crash. It is when PSX’s KSE-100 index dwindled, losing 2,106 points (5.51%). Subsequently, this resulted in stopping all types of trade activities for 45 minutes.
Following the stock market crash, PSX management issued their statement saying: “PSX has triggered a market halt at 9:37 am which will last for 45 minutes. Nevertheless, The market halt is triggered as a standard protocol for risk management purposes.”
The frailty in the global market has occurred due to the drop in the oil prices, at such a crucial time when the economy feels the wrath of the Coronavirus. As a matter of fact, several banks have lacerated their interest rates to bear the burden on the economy resulting from the Coronavirus.
Pretext Behind The Value Escalation!
The highlight of the situation points towards when Saudi Arabia proposed Russia to partner up with the OPEC. The agenda behind this coalition was to agree upon shares of oil production. Upon Russia failing to comply with the OPEC, Saudi Arabia launched its own price war, by delivering substantial amounts of oil along with intensifying discounts.
With Saudi Arabia pumping 9.7 million barrels per day, the kingdom has ramped the production to 12.5 million barrels per day. However, this has been beneficial for Pakistan in a certain way. As this could help Pakistan save $4-5 billion.
Shedding light on the global market, the central banks around the globe are facing a serious dilemma. With a potential slow economic growth on its way, the banks have to work on how to support their economy in such a hectic situation.
Head of the country risk and global strategy department at Fitch Solution, Cedric Chehab says: “Central banks across emerging markets are, on the one hand, facing huge sell-offs in their currencies. Moreover, on the other hand, a slowdown in growth.”
Adding to his conversation, he says: “So what do they do? Do they cut interest rates to stimulate growth or do they raise interest rates to support their currencies? I think a lot of central banks are going to be squeezed by this policy dilemma now.”
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