Tuesday Jul 26 2022
BDBusiness Desk

PKR continues to sink against US dollar as political crisis deepens

BDBusiness Desk
A foreign currency dealer counts US dollars at a shop in Karachi, Pakistan, May 19, 2022. — AFP/Fil
A foreign currency dealer counts US dollars at a shop in Karachi, Pakistan, May 19, 2022. — AFP/Fil

  • Pakistani rupee reaches new low against US dollar.
  • PKR closes at 232.93 in interbank market.
  • Analysts blame persistent political crisis.

KARACHI: The Pakistani rupee continued to lose ground against the US dollar on Tuesday, hitting a new low in the interbank market as the financial markets remained jittery amid an ongoing political crisis.

The local unit closed at Rs232.93 in the interbank market, up from Rs229.88 a day earlier, as it shed Rs3.05 or 1.31% against the dollar, data from the State Bank of Pakistan (SBP) showed.

The rupee has been one of the world’s worst-performing currencies, slumping more than 30% since the start of the year (2022), The News reported.

Tahir Abbas, the head of research at Arif Habib Limited, said: “Shortage of dollars, political and economic uncertainty tagged with ambiguity regarding commitment from friendly countries, which is needed for disbursement of IMF tranche were the reasons behind rupee’s persistent slide."

Fears have risen about Pakistan's stuttering economy as its currency fell nearly 8% against the US dollar in the last trading week, while the country's forex reserves stand below $10 billion with inflation at the highest in more than a decade.

Alpha Beta Core CEO Khurram Schezad told that the dollar is getting stronger in the global market almost against all the world currencies — and the rupee is not an exception.

In addition, he said, Pakistan's external account issues are not settled as yet though imports are slowing.

He noted that although the International Monetary Fund is on board for disbursement, the flows are yet to materialise as the Executive Board's final approval is awaited.

"Global rating agencies have put a negative outlook on the economy, so that is an additional burden that is weighing in on the financial markets in general and forex market in particular," he added.

Muhammad Saad Ali, a capital market expert, told that the rise in political uncertainty — of whether the present government will remain in office long enough to stabilise the economy and the continued confusion around who governs the Punjab province — is causing the rupee to slip.

"Note that balance of payments pressure on the currency have eased, as per the central bank, which asserts that Pakistan has enough capital commitments for the next 12 months to take care of its dollar outflows," he said.

"I reiterate political uncertainty is weakening market sentiment and leading to more rupee depreciation," Ali added.