- Analysts attributed the latest decline in the value of rupee to political chaos.
- The total trade deficit of the country escalated to $35.52 billion.
- The rupee lost Rs 25.03 from Rs 204.85 to dollar on June 30, 2022 to the current level of Rs 229.88.
KARACHI: The Pakistani rupee shed Rs1.51 on Monday to touch a fresh historic low of Rs229.88 against the dollar on Monday as the political crisis worsened keeping traders under pressure.
The local unit shed Rs1.51 to close at Rs229.88 to the dollar from Friday’s closing of Rs228.37 in the interbank foreign exchange market.
Analysts attributed the latest decline in the value of rupee to the political chaos which has affected the economic activities and the confidence of the investors and traders alike.
The depreciation in the local currency has gained acceleration amid uncertainty on the political front after the ouster of the Pakistan Tehreek-e-Insaf (PTI) federal government through a no-confidence motion in April.
With the ambiguity regarding the future of government in Punjab, the country’s political and economic fronts have become messier in an already tense environment, where PTI knocked the doors of the Supreme Court of Pakistan to nullify the election of Hamza Shahbaz as the Chief Minister of Punjab.
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 local unit has been on a continuous decline as the investors and traders are buying the dollar for import payments which have created a higher demand in the interbank while the exporters hold their receipts for better yields which furthered the pressure on the local unit, they added.
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 total trade deficit of the country 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 Rs25.03 or 12.21 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs229.88.
At the open market, the buying and selling of the dollar was recorded at Rs228 and Rs230 at 4:30 pm PST.
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