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Pakistani rupee plunges to all-time low

The greenback value surged by 82 paisa in early trade and is currently trading at Rs188.35 in the interbank market.

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The Pakistani rupee slumped to an all-time low against the US dollar in the interbank market on Tuesday, amid rapid depletion in foreign exchange reserves and uncertainty over the revival of the International Monetary Fund (IMF) programme.

According to ARY News, forex dealers said the exchange rate remained under pressure as the US dollar continued its upward spiral against the local currency.

The greenback value surged by 82 paisa in early trade and is currently trading at Rs188.35 in the interbank market.

The forex dealers have further shared that the greenback is being sold above Rs189 in the open market.

Earlier on Monday, the US dollar depreciated by 0.48% to Rs187.53 in the inter-bank market.

Since the beginning of this fiscal year (July 1, 2021), the rupee has dropped by 19.03% (or Rs29.99) compared to the previous fiscal year’s close Rs157.54.

Meanwhile, the State Bank of Pakistan’s (SBP) foreign exchange reserves fell by $328 million to $10.558 billion (adequate to pay less than two months of imports) during the week that ended on April 23, data released by the central bank showed.

The country’s forex reserves fell 0.7% to $16.5 billion on April 30 on increased external debt payments. The reserves held by the State Bank of Pakistan declined by $59 million to $10.5 billion. This has mounted pressure on the local currency.

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The rupee has maintained a downward trend for the last 13 months. It has lost 23.1% (or Rs35.26) to date, compared to the record high of Rs152.27 recorded in May 2021.

Moreover, with a surging current account deficit and foreign reserves falling, the country is in dire need of external finances. There has not been any development on China’s $2.4 debt rollover.

The government has requested Saudi Arabia not to withdraw $3 billion in deposits from the SBP but to extend the maturity on this debt.

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The IMF has agreed to resume a $6 billion loan programme, but the formal approval may take another four to six weeks and will pass the crucial new budget period.

Amid these developments, the new government would need to trend the economic landscape carefully.