KARACHI: The Pakistani rupee plunged to an all-time low of Rs198.39 on Wednesday, losing Rs2.65 owing to deteriorating indicators at the macroeconomic fronts coupled with the uncertainty regarding the talks with the International Monetary Fund (IMF).
The local unit fell Rs2.65 to close at Rs198.39 to the dollar from Tuesday’s closing of Rs195.74 in the interbank foreign exchange market. The rupee recorded the previous historic low of Rs195.74 on Tuesday, May 17, 2022.
The rupee touched the historic low against the greenback as the prevailing economic uncertainty kept the rupee under pressure, with forex reserves of the country declining to a 22-months low, minimal inflows of the foreign exchange on the back of lower exports and rising import bill amid highly volatile global commodity prices, the dealers said.
Pakistani government officials’ talks with the International Monetary Fund (IMF) have commenced on Wednesday, for the revival of the Extended Fund Facility (EFF) programme, however, panic buying for the dollar was witnessed in the market as the importers are speculating the rupee value to deteriorate further if the government could not convince the IMF for the revival of the loan disbursement programme.
The government is holding talks with the IMF, even though it has maintained the subsidy on the prices of fuel and electricity. The IMF has previously called for the removal of the subsidies, which the government is reluctant to do as it is expected to bring a new wave of inflation in the country.
The country needs foreign exchange to strengthen its forex reserves and provide support to the local unit, which, at this point, is a challenging task as the government has so far failed to convince the friendly countries to rollover the loans.
Although the country received record remittance of $3.1 billion during the month of April, the declining forex reserves remain a daunting challenge for the stability in the value of rupee.
Pakistan’s forex reserves dwindled to a 22-month low. The country’s foreign exchange reserves dropped to their lowest level since December 2019 at $16.3 billion in the week ended May 6.
The country’s reserves declined by $178 million to $16.376 billion. The reserves held by the central bank decreased another $190 million to $10.31 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 Rs40.85 or 25.92 per cent from Rs 157.54 to dollar on June 30, 2021 to the current level of Rs 198.39.
At the open market, the buying and selling of the dollar was recorded at Rs199 and Rs 201 at 5:00 pm PST.
