Tuesday Apr 19 2022

Rupee resumes downward slide against US dollar, once again surpasses 184-mark

A currency dealer can be seen counting Pakistani and US currency notes. — AFP/File
A currency dealer can be seen counting Pakistani and US currency notes. — AFP/File

  • Rupee settles at Rs184.44 against the US dollar.
  • Higher dollar demand from importers pushes US dollar higher.
  • Local currency dropped to an all-time low of Rs188.18 on April 7.

KARACHI: The Pakistani rupee fell on Tuesday as higher dollar demand from importers pushed the US dollar higher.

According to the State Bank of Pakistan (SBP), the local currency lost 1.03% (or Rs1.9) to close at Rs184.44 against the greenback in the interbank market as concerns over weak economic fundamentals weighed in on the sentiment.

Currency dealers say the rupee has been under pressure since yesterday (Monday) due to import payments. Moreover, the outlook seems bleak on the back of a stalled International Monetary Fund (IMF) programme, the widening of the trade deficit and depleting foreign exchange reserves.

Read more: Rupee can strengthen to 160 against US dollar in few months, says Ishaq Dar

The rupee has maintained a downward trend for the last 11 months. It has lost 21.12% (or Rs32.17) to date, compared to the record high of Rs152.27 recorded in May 2021.

With a fresh decline of 1.03%, the Pakistani rupee has depreciated by 17.07% (or Rs26.9) since the start of the current fiscal year on July 1, 2021, data released by the central bank revealed.

The rupee had been under pressure since the beginning of March when the then Opposition submitted the no-confidence motion against the then prime minister Imran Khan. The domestic currency dropped to an all-time low of Rs188.18 on April 7 after Khan dissolved the Parliament and called fresh elections in a bid to block an opposition attempt to oust him.

This caused a political crisis in the country. The rupee started recovering on April 8, following a big 250 basis points hike in interest rates by the central bank and the change of government in the country.

Earlier, Ismail Iqbal Securities Head of Research Fahad Rauf said the local unit’s recovery was linked to political clarity but fundamentals still remain the same.

“The reserves are depleting, less than two months of import cover. Commodity prices, especially crude oil price, have been increasing again, while the IMF programme is also on hold,” he added.

Read more: SBP governor pledges 'timely policy actions' amid political crisis

Furthermore, the market still awaits positive news on the rollover of $2.4 billion in debt from China. It is necessary for Pakistan to begin discussions with the IMF for the completion of the seventh review of a $6 billion Extended fund Facility (EFF) as the forex reserves are just enough to cover 1.6 months of imports.