Sunday Jun 19, 2022
KARACHI: The Pakistani rupee is expected to maintain its losing streak next week if the government does not reach an agreement with the International Monetary Fund (IMF) for revival of a $6 billion financial package, say traders.
The local unit continued making record lows, hitting an all-time low of 208.75 per dollar in the interbank market.
The local unit depreciated by 4.89 rupees this week.
“It seems difficult to see a respite in the rupee unless positive news comes from the IMF,” said a foreign exchange trader.
“The line-up import payments and falling foreign exchange reserves amid falling reserves will put pressure on the rupee, forcing it to lose more ground against the dollar in the coming week. Any breakthrough on IMF talks is a sole remedy to protect the rupee from declining more,” he added.
If the IMF deal is finalised, the rupee may settle at 195-200 per dollar, he said.
The IMF officials are holding talks with Pakistan’s authorities and a breakthrough is likely to occur next week.
The steeper decline in the foreign currency reserves, delay in the IMF programme and the appreciation of the US dollar against major currencies led to the weakening of the rupee.
The central bank’s reserves dropped 2.6% to $8.99 billion as of June 10, covering 1.32 months of imports. The fast-eroding reserves have threatened to intensify the balance of payments crisis.
Risk assets like stocks and cryptos saw sell off than bonds and commodities. In currencies, many currencies like Yen, Indian Rupee, Baht, T Lira, Ringgit, Euro, GBP, CHF, B. Taka, etc made multi decade or life time lows.
Pakistan’s currency is one of the worst performers in the world as it has depreciated by 14.57% against the dollar this year, the data compiled by Ismail Iqbal Securities showed.
It’s not the rupee that has tumbled and underperformed its regional peers and various global currencies, but other ones are taking a beat.
The Pakistani rupee and the Japanese yen fell almost equally against the dollar this calendar year to date. The yen declined by 13.34%.
The local unit is one of the 15 currencies that have lost ground. The Sri Lankan rupee has been the worst-performing, plummeting 43.9%, with the Laotian Kip battering 24%, Turkish Lira 23.18%, and Ghana Cedi 22.33 %, respectively, the data revealed.
The rupee has lost ground, taking cues from a sharper decline in the foreign currency reserves sparked by higher import bill amid global crude and other commodity prices. The dollar’s strength against major currencies also put pressure on the local unit.