KARACHI: The decline in the rupee continued on Wednesday as it closed at the historic low of Rs186.12 amid political turmoil and fall in the foreign exchange reserves of the country.
The local currency fell 89 paisas against the dollar from the previous day’s closing of Rs185.23 in the interbank foreign exchange market.
The dealers said that the free-fall in the local unit has been witnessed due to the political uncertainty in the country, external payment demand and volatile international oil prices amid the Russia-Ukraine war.
The political instability in the country, lingering talks with the International Monetary Fund (IMF) and higher commodity prices in the global market have badly hit the stability of the rupee in the interbank.
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 Rs25.58 or 18.14 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs186.12.
At the open market, the buying and selling of the dollar was recorded at Rs186 and Rs187.85 at 3:20pm PST.