The State Bank of Pakistan (SBP) has refuted recent reports suggesting that it is convening an emergency meeting of the Monetary Policy Committee (MPC) in response to the historic decline of the local currency against the US dollar.
In an official statement, the central bank categorically denied the existence of any such emergency meeting, dismissing the reports as entirely unfounded.
This statement comes in the wake of the local currency’s significant depreciation, with the exchange rate reaching Rs305.54 after a sharp drop of Rs1.09 in the interbank market on Thursday. Additionally, in the open market, the US dollar is now trading at a rate exceeding Rs320.
Meanwhile, the Pakistan Stock Exchange (PSX) experienced a substantial downturn on Thursday, with the benchmark index plummeting by over 2%. This decline was primarily attributed to growing concerns about the deteriorating economic situation in the country. Investors reacted with apprehension to the widening gap between the rupee and the dollar, choosing to divest their shares amid fears of an impending economic crisis.
In light of the prevailing uncertainty and its adverse impact on the economy, there had been speculation that the SBP might convene an emergency MPC meeting to assess the key policy rate with the aim of stabilizing the local currency.
However, in response to these speculations, the SBP clarified that it would be premature to anticipate any changes in the future policy rate. The SBP emphasized that only the MPC, an independent statutory body, possesses the authority to make decisions regarding the policy rate.
The central bank further announced that the next scheduled meeting of the MPC is set to take place on September 14, 2023. During this meeting, the MPC will assess the ongoing economic developments and make appropriate decisions accordingly.
On July 31, the SBP had opted to maintain the existing key rate at 22%, a decision that surprised many, especially considering the International Monetary Fund’s recommendation for further tightening of monetary policy to address inflationary pressures.