Administrative crisis at SBP in the offing as three board members retiring

KARACHI: An administrative crisis is in the offing at the State Bank of Pakistan (SBP) after three members of the Board of Directors (BoD) of the Central bank will retire tomorrow, ARY NEWS reported.

According to details, the members of the board of directors (BoD) retiring on July 22 (tomorrow) included Dr Tariq Hasan, Ali Jamil and Saleem Sethi.  It is necessary for the board meeting to have four members to decide on key matters of the SBP.

Furthermore, the SBP currently does not have a governor and Deputy Governor Murtaza Syed is running the affairs as the acting governor.

It is pertinent to mention here that the role of the SBP has come under strict scrutiny following a record hike in the rate of US dollar against the rupee in the interbank and open market.

Yesterday, the State Bank of Pakistan (SBP) issued a report regarding the recent fluctuation in the currency rates, citing an international spike in Dollar rates and ‘domestic uncertainty as reasons for the huge devaluation of PKR.

The SBP shared a detailed report justifying the recent drop of the local currency against the USD on Twitter.

The report read that the recent movement in Rupee rates is ‘a feature of a market-determined exchange rate system.’ The current account position, relevant news items, and domestic uncertainty together are causing the daily currency fluctuations.

It added, “Recent Rupee depreciation against the US$ is also in large part a global phenomenon. Globally, the US$ has surged by 12% in the last 6 months to a 20-year high, as the Fed has aggressively raised interest rates in response to rising inflation.”

The report added that like most advanced and emerging market currencies across the world, the Rupee has depreciated against the US since Dec 21. It has depreciated by 18% over this period.

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The SBP clarified that in real effective terms—i.e. against a basket of currencies in which Pakistan trades & adjusting for inflation—depreciation in the Rupee since Dec 21 has only been 3%. This is a better measure of the strength & competitiveness of a currency than the US rate.