KARACHI: The free-fall in the value of Pakistani rupee continued as it plunged to the historic low of Rs236.02 against the dollar on Wednesday.
The local unit shed Rs3.09 to close at Rs236.02 to the dollar from Tuesday’s closing of Rs232.93 in the interbank foreign exchange market.
Currency experts said that the local currency has been on a continuous decline as the country is in the midst of a financial and political crisis which kept the market under pressure.
Although the imports of the country recorded a decline, however, the financial woes of the country have intensified as the country’s foreign exchange reserves are on a constant decline.
Pakistan and the International Monetary Fund (IMF) have agreed to resume the multibillion dollar Extended Fund Facility (EFF) programme, but the disbursement of the funds have not been materialised till yet, they added.
Additionally, the exporters are holding receipts in expectation of better yields while the market witnessed increasing demand for import payments, which pushed the rupee to record low.
Fitch Ratings agency has also downgraded Pakistan’s outlook from stable to negative in view of the significant deterioration in the country’s external liquidity position and financing conditions since early 2022.
The shrinking foreign exchange reserves of the country also kept the market under pressure. The foreign currency reserves held by the State Bank of Pakistan (SBP) recorded a decline of $389 million to reach $9.32 billion during the week ended July 15, compared with $9.71 billion on July 7.
The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $15.24 billion. The net reserves held by banks amounted to $5.91 billion.
The current account deficit remains one of the key challenges for the stability of the rupee, as after moderating in the previous three months, it rose to $1.4 billion in May, on the back of lower exports and remittances partly due to the Eid holiday.
The trade deficit rose to $4.8 billion in June, more than $1.7 billion higher than its February low. While non-energy imports have continued to moderate in the last three months on the back of curtailment measures by the government and the SBP.
The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs31.17 or 15.21 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs236.02.
At the open market, the buying and selling of the dollar was recorded at Rs236 and Rs240 at 4:30pm PST.