KARACHI: The Pakistani rupee shed 51 paisas to reach an all-time low of Rs201.92 on Wednesday owing to the uncertainty on the domestic political and economic fronts.
The local unit fell 51 paisas to close at Rs201.92 to the dollar from Tuesday’s closing of Rs201.41 in the interbank foreign exchange market. The rupee recorded the previous historic low of Rs201.41 on May 24, 2022.
The State Bank of Pakistan’s (SBP) measures to significantly hike the policy rate by 150 basis points, and tightening of the auto finance rules have not been able to provide support to the local currency, the dealers said.
The investors and traders’ confidence was shattered and higher demand for the dollar was witnessed amid depleting foreign exchange reserves and ballooning current account deficit which has been surging due to the elevated global commodities prices, they added.
Despite the resumption of the negotiations between Pakistan and International Monetary Fund (IMF) for the revival of the Extended Fund Facility (EFF), the rupee has been on a downward stream as the investors and traders are expecting a likely negative outcome of the dialogues due to government’s measures contrary to the IMF’s conditions.
Pakistan can boost the investors’ confidence by the successful completions of the talks with IMF, which is also significant in getting funds from other multilateral lenders.
The country received record remittance of $3.1 billion during the month of April, however, the reducing forex reserves pose a significant threat to the stability in the value of rupee.
The foreign exchange reserves held by the SBP were down $145 million to $10.16 billion on a weekly basis, compared with $10.30 billion on May 6, according to data released by the central bank.
The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $16.16 billion, while the net reserves held by banks amounted to $5.99 billion.
The widening current account deficit is another vital factor in the escalation of the dollar value. Pakistan’s trade deficit showed a sharp growth to $3.64 billion in March 2022, registering an increase of 12 per cent over the same month of the last fiscal.
The total trade deficit escalated to $35.52 billion in the first nine months (July-March) period of the current fiscal year against $20.8 billion in the same period last fiscal year.
The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs44.39 or 28.17 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs201.92.
At the open market, the buying and selling of the dollar was recorded at Rs202 and Rs204 at 5:45pm PST.
https://www.bolnews.com/business/2022/05/rupee-at-historic-low-of-rs201-92-dollar/
