Rupee slides to fresh low of 174.43 against US dollar
October 25, 2021
KARACHI: The rupee touched a new all-time low of Rs174.43 against the US dollar in the inter-bank market on Monday in the wake of mounting pressure of import payments as well as looming uncertainty regarding a delay in the International Monetary Fund’s decision regarding resumption of $6 billion Extended Fund Facility (EFF).
The rupee has maintained the downtrend for the past five months. It has lost 14.55% (or Rs22.16) to date compared to the 22-month high of Rs152.27 recorded in May.
With a fresh decline of 0.25%, the rupee has depreciated 10.72% (or Rs16.89) since the start of the current fiscal year on July 1, 2021, data released by the central bank revealed.
“Rupee is expected to remain under pressure if IMF-Pakistan talks remained inconclusive,” currency traders forecast, as they believe, the massive depreciation of rupee against dollar was also caused by the panic buying and forward booking by the importers because of fears of a possible failure of IMF-Pakistan talks.
Traders also held higher imports coupled with rising commodity prices in the international markets responsible for strengthening the dollar against the rupee.
However, apart from the dollar demand by the importers, the panic selling and forward booking of the dollar is also contributing to the rupee depreciation against the greenback.
Speaking to Geo.tv, Alpha Beta Core CEO Khurram Schehzad said there is a lot of uncertainty at the moment due to the energy crisis and costly imports of LNG and oil.
“It is uncertain to say that when will the currency consolidate,” the analyst said, adding that the delay in IMF’s decision is also adding pressure to the currency.
Schehzad was of the view that as soon as the IMF programme resumes other international financial institutions will also come on board and “this is important to increase the liquidity.”
He further added that the resumption of the IMF programme will give psychological support to the market.
The international crude oil prices are hovering above $85/barrel, which has been making imports of petroleum products for domestic needs pricier.
