Rupee continues nosediving, reaches near all-time low against dollar
KARACHI: The post-flood economic situation and dollar shortage in the country kept the Pakistani rupee under pressure for the 15th consecutive session as the local unit posted further losses in the interbank market on Thursday.
The rupee fell 0.03 percent to 239.71 in the interbank market, depreciating from the previous session’s close of 239.65.
The rupee is now only Rs 0.23 below its all-time low of Rs 239.94 on 28 July 2022.
The rupee, which has been one of the worst-performing emerging market currencies, has fallen by around 9% so far this month due to a wide range of factors.
KASB Securities analyst Yusuf Rehman told The News that credit provision was a factor behind the rupee’s fall as overall financing requirements for the year are estimated at $32 billion.
Rehman also noted that the floods forced the government to import vegetables, grains and cotton to replace damaged crops – putting pressure on the rupee.
“This has put further pressure on the import bill and there have been reports of continuous outflow of dollars through gray channels, especially from the Afghanistan border,” Rehman said.
He said that the fundamentals and sentiments of the depreciated rupee will not improve until the expected inflows from friendly countries are met.
“Once additional financing is received from the World Bank, ADB. [Asian Development Bank]And its allies, the rupee may stabilize around the 215 mark, Rahman added.
The reinvigoration of the International Monetary Fund’s (IMF) bailout program and the release of a $1.1 billion loan tranche from the fund last month briefly supported the rupee in late August. However, the currency is once again struggling.
“The strengthening of the dollar and higher commodity prices are affecting regional and major currencies,” said Komal Mansoor, head of research at Tracemark.
“[The] The Indian rupee also trades above 80/dollar this week, and they have spent $90 billion to defend their already stable currency. The yuan, euro, and sterling have all hit multi-year lows,” Mansour said.
But the local currency reaching new levels is a concern for the economy as it shows the government’s inability to stabilize foreign exchange reserves and reverse negative sentiment. “Some kind of bidirectionality is important for currency”.