KARACHI: The rupee slid down on Tuesday to close at the historic low of Rs185.23 amid political and economic uncertainty in the country coupled with volatile international commodities prices.
The local unit fell Rs1.14 against the dollar from Friday’s closing of Rs184.09 in the interbank foreign exchange market. The market remained closed on Monday as the State Bank of Pakistan (SBP) announced a bank holiday for the purpose of deduction of Zakat.
The rupee remained under pressure due to the political uncertainty in the country, external payment demand and volatile international oil prices amid Russia-Ukraine war, the dealers said.
WTI crude and Brent oil prices were seen moving higher on Tuesday as the European Union (EU) is said to be readying a new package of economic sanctions against Russia on alleged war crimes in Ukraine.
The country’s political front took a surprising turn over the weekend as Pakistan’s President Arif Alvi approved the dissolution of the National Assembly on Prime Minister Imran Khan’s advice which escalated the demand for foreign currency.
The elevated global commodity prices and a recovery in the domestic demand post Covid-19 has put significant pressure on Pakistan’s foreign-exchange reserves in recent months, while the large external payments against foreign debts also played a part in depressing the rupee value.
The country’s foreign exchange reserves depleted by around $8.67 billion in just seven months, falling from a record high of $27.23 billion.
The foreign currency reserves of the country declined to $18.554 billion by the week ended March 25, 2022, the State Bank of Pakistan (SBP) said.
The ballooning current account deficit is another reason for escalation in the dollar value. Pakistan’s current account deficit ballooned to $12 billion during the first eight months (July-February) 2021/22 against a surplus of $994 million in the corresponding months of the last fiscal year.
Although the current account deficit narrowed to $545 million in February 2022, compared with the deficit of $2.53 billion in January 2022, the scheduled external repayments are still a threat to the balance of payment.
The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs27.69 or 17.57 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs185.23.
At the open market, the buying and selling of the dollar was recorded at Rs183.8 and Rs185.5 at 4:00pm PST.