Delay in IMF decision and political crisis push local currency further down to new record lows
KARACHI: The Pakistani rupee maintained its downturn for the 14th consecutive working day, as it inched down by 0.24% on a day-to-day basis to a new record low at Rs201.41 against the US dollar in the interbank market on Tuesday.
It closed at Rs200.93 against the greenback on Monday, according to the State Bank of Pakistan (SBP).
The decline in the domestic currency’s value came after the political crisis deepened in the country on the back of the ongoing war between the PTI and coalition government regarding the formers ‘Azadi March’ toward Islamabad scheduled to begin tomorrow.
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Moreover, news regarding delay in the talks between Pakistan and the International Monetary Fund (IMF) added fuel to the downtrend.
Since the beginning of this fiscal year (July 1, 2021) to date, the rupee has collectively dropped by a massive 27.84% (or Rs43.87) compared to the previous fiscal year’s close at Rs157.54.
The rupee has maintained a downward trend for the last 13 months. It has lost 32.27% (or Rs49.14) to date, compared to the record high of Rs152.27 recorded in May 2021.
The rupee was trading at 202 versus the greenback in the open market. It was sold at 201.80 in the previous session. The local unit has already been under severe pressure due to uncertainty about the revival of the IMF programme amid the lack of clarity on the government’s front to remove fuel and electricity subsidies.
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However, Imran Khan’s call for a march to the capital city has resurfaced concerns about the political future of the country.
“Investors are very much worried about the economic and political outlook of Pakistan, hurting sentiment on the rupee,” a foreign exchange trader said.
Investors were also concerned about the country’s ability to meet its external obligations due to the persistent decline in the foreign currency reserves.