KARACHI: The Pakistani rupee shed 48 paisas to touch an all-time low of Rs201.41 on Tuesday despite the State Bank of Pakistan’s (SBP) measure to hike the policy rate in order to curb demand.

The local unit fell 48 paisas to close at Rs201.41 to the dollar from Monday’s closing of Rs200.93 in the interbank foreign exchange market. The rupee recorded the previous historic low of Rs200.93 on May 23, 2022.

The dealers said that the rupee continued moving on a downward stream despite the central bank’s measure to significantly hike the policy rate by 150 basis points to 13.75 per cent in its meeting on Monday.

The latest measures by the SBP were not able to provide stability to the value of the rupee as the ballooning current account deficit, depleting forex reserves and political uncertainty remain the biggest challenges for rupee parity against the greenback, they added.

Negotiations between Pakistan and the International Monetary Fund (IMF) have also resumed for the revival of the Extended Fund Facility (EFF), but the traders and investors’ hopes are low for a positive outcome amid the government’s decision to maintain the subsidies on the prices of fuel and electricity.

The resumption of the IMF programme is of much significance to boost the confidence of investors and other multinational lenders. The rollover of loans from friendly countries have also been stalled which resulted in the further depreciation in the value of the rupee.

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 Rs43.87 or 27.84 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs200.93.

At the open market, the buying and selling of the dollar was recorded at Rs200 and Rs201.5 at 4:45pm PST.