PKR to dollar: Rupee’s downward spiral continues unabated

A currency dealer is counting $100 notes while 5000 rupee notes are placed on the table. — AFP/File

Karachi: Economic activities in the country have been affected due to deadly floods. Rs On Tuesday, it continued its decline against the US dollar for the 13th session in a row.

During intra-day trade in the interbank market, local unit It fell by Rs 1.09 and fell to Rs 239 per dollar from the previous close of Rs 237.91 against the dollar.

The dollar is now just Rs 0.94 lower than its all-time high of Rs 239.94 on July 28, 2022.

The decline can be attributed to several factors, including continued demand for dollars from local importers amid the country’s drying dollar reserves, and rising import bills as a result of the worst floods.

Saad Hashmi, an independent economist, said the recent depreciation of the currency was due to the onset of floods and their detrimental impact on the country’s external account as crop losses would now need to be met through imports.

“It is highly likely that the rupee will come under foreign inflows, which it will eventually. It should be noted that the country’s external funding needs are fully met by the IMF (International Monetary Fund). are provided under the programme,” added Hashmi.

Secretary General of Exchange Companies Association of Pakistan Zafar Paracha said that despite the big announcements by the government and institutions, the market perception about the local unit remains the same.

The government recently announced a $3 billion rollover of Saudi Arabia, and the finance minister assured the nation that the economy would improve in the coming month.

Moreover, the IMF resident representative said that the lender would help Pakistan in reconstruction and relief work. But even such positive news has so far failed to change the market perception of the local unit.

The open market is also facing a shortage of US currency.

Analysts said investors were still concerned about the impact of the floods on the economy, particularly the external sector. The key issue will be managing IMF expectations while finding room for relief and recovery spending.

Addressing. Geo.tvSamiullah Tariq, head of research at the Pakistan Kuwait Investment Company, cited two major reasons for the rupee’s decline: import pressure and a severe lack of liquidity.

“Pressure from Peshawar’s foreign market – led by Afghan trade – is weighing on the local currency as demand for the greenback is high while supply is low,” he said.

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