KARACHI: The Pakistani rupee slided Rs1.61 to make an all-time low of Rs200 on Thursday owing to the prevailing political and economic crises in the country.
The local unit fell Rs1.61 to close at Rs200 to the dollar from Wednesday’s closing of Rs198.39 in the interbank foreign exchange market. The rupee recorded the previous historic low of Rs198.39 on May 18, 2022.
The dealers said that the greenback jumped to the historic high mark of Rs200 owing to the uncertainty on the domestic political and economic fronts. The rupee remained under pressure due to the depleting forex reserves and widening current account deficit on the back of surging import bill, they added.
The free-fall in the value of the rupee continued despite the fact that talks with the International Monetary Fund (IMF) resumed to revive and extend the Extended Fund Facility (EFF) programme to help stabilise the economy.
The government’s talks with IMF are of much significance to restore the confidence of investors and other multinational lenders, but a positive outcome is unlikely due to the government’s decision to maintain subsidies on fuel and electricity price, a prerequisite condition from the IMF to revive the loan programme.
The rollover of loans from friendly countries have also been stalled where any positive development is not seen till yet. Additionally, a surging demand for the foreign currency was witnessed in the market for import and external payments, which also played a vital role in the depreciation of the local unit, the dealers added.
The country received record remittance of $3.1 billion during the month of April, however, 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 Rs42.46 or 26.95 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs200.
At the open market, the buying and selling of the dollar was recorded at Rs200 and Rs201.5 at 9:30pm PST.