Almost 3 months into office, the coalition government has pulled off a critical feat in a country long ravaged by inflation. Believe it or not, the new finance team has stabilized the currency - by tampering with it. A high-profile Karachi-based currency dealer who worked in close coordination with the 2022 Finance Division told ProPakistani that the PKR is still being manipulated. 'In 2022, commercial banks were found complicit in forex market manipulation for profiteering. Today, the central bank (regulator) is purchasing interbank dollars to control the PKR. This is worrisome and not the best time to be reckless with an IMF tranche and Saudi investments on the horizon,' he said. The PKR has not only ceased its daily nosedives but has even surged significantly in one key foreign exchange market (USD), rallying 1.2% against the dollar over the past three months in the blue-chip era of the Special Investment Facilitation Council. An Islamabad-based investment banker told ProPakistani, In a country where the currency's value seems theoretically near or above 300/$, this statistic is nothing short of staggering. The current regime's aggressive measures to rein in government spending, quell demand for dollars, and combat food inflation-nearly 27% -have evidently made a speculative impact. The strategy is more damaging for long-term projections. Notably, Finance Minister Muhammad Aurangzeb last week predicted inflation to decline to single-digit levels by the end of 2025. The banker said Aurangzeb's approach was wrong. Rupee Story For Remaining 2024 The banker said the risks loom large for Aurangzeb and his bold currency-stabilization remarks. Mounting political uncertainty, driven by economic slowdowns and forex manipulation, threatens to derail his fiscal agenda. The banker added that there's no guarantee that inflation will decline as swiftly as Aurangzeb anticipates, potentially stalling the PKR's ascent. While the PKR's newfound strength may seem beneficial, it could spell trouble for exporters and dete r foreign investment. A few channels told us that certain sectors are feeling the pinch as the PKR's artificial position undermines competitiveness. But still, SBP can't risk allowing the rupee to fall as the latest REER numbers suggest. For the time being, the PKR continues to remain at 278-279/$, buoyed only by pure speculation and SBP buying dollars. The central bank's intervention to bolster reserves underscores the country's departure from recommended monetary trends, where many central banks are scrambling to defend their currencies against the dollar by keeping inflation high and letting market forces control trends. A regular open market trader told ProPakistani that SBP's persistent interventions worsen supply-and-demand imbalances. It should be noted that the confidence in the PKR has temporarily alleviated demand for dollars, allowing the central bank to maintain a high interest rate and base it on inflation. Former Finance Minister Ishaq Dar's 2022 journey from denouncing the PKR as 'undervalue d' to overseeing its collapse below 300 in 2023 was an extraordinary event but Aurangzeb's maiden stint as finance czar may eclipse it. But let's not dwell on negativities. Political fragility and mounting pressures could quickly change the picture for Aurangzeb and trigger renewed PKR volatility. Maybe it is for the best, but Rupee's sustainability in 2024 remains uncertain. Source: Pro Pakistani