Rupee's downward spiral continues unabated, breaches 190 threshold

• Pakistani rupee closes at Rs190.02 against greenback.
• IMF uncertainty, absence of direction from govt regarding economic policies takes a toll on rupee.
• Analyst says govt needs to lay out a clear economic roadmap on the way forward.

KARACHI: The Pakistani rupee reeled to an all-time low against the US dollar on Wednesday, breaching the critical threshold of 190 against the greenback in the interbank market.

With a fresh decline of Rs1.36 (or 0.72%), the local currency closed at Rs190.02 against the greenback in the interbank market, surpassing Tuesday’s record low of Rs188.66.

Recent decline was attributed to uncertainty with respect to the International Monetary Fund (IMF) programme, coupled with an absence of direction from the government on major economic policies and a roadmap.

The rupee was down because of two major reasons, Arif Habib Limited Head of Research Tahir Abbas said while talking to Geo.tv. “First, due to uncertainty regarding the revival of the IMF loan programme. Second, depleting foreign exchange reserves,” he said.

The analyst further added that lack of direction and clarity regarding the government’s economic strategy, delay in decision making on IMF’s pre-requisites — which include removal of subsidies and increase in petrol, and electricity prices — rising commodity prices in the international market dampened the sentiment of the market.

Abbas said: “Because of the uncertainty regarding the IMF programme, other friendly countries have also said loans are contingent on fulfilment of IMF conditions which is also taking a toll on the already depreciating currency".

“The government needs to lay out a clear economic roadmap,” he asserted.

Since the beginning of this fiscal year (July 1, 2021) to date, the rupee has collectively dropped by a massive 20.61% (or Rs32.48) 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 24.79% (or Rs37.75) to date, compared to the record high of Rs152.27 recorded in May 2021.