Unpegged dollar jumps by 10pc to shatter all records

The forewarning of a meltdown as soon as the ‘unannounced’ peg on the dollar rate would be lifted materialised on Thursday when the USD value shot up by a record Rs24.54 in the interbank market. The government’s move to remove ‘the cap’ and to allow market factors to determine the exchange rate came at the back of the International Monetary Fund’s demand to revive the stalled loan programme. The USD closed in the interbank at Rs255.43, after an increase of 10.6 per cent, while the rate in the open market fluctuated between Rs257 and Rs260. On Wednesday, the dollar closed at Rs230.89 in the interbank market. The government’s move to take the reins off the interbank market came a day after exchange companies removed a self-imposed cap on the dollar rate. The move, as expected, shot the open market value of the dollar to Rs252.5 but the State Bank intervened to bring it down to Rs243. Thursday’s move took the currency market by a surprise and resulted in extreme volatility. The trading remained thin in the interbank as currency dealers were cautious in watching the dollar movement.