KARACHI: Maintaining its spree of setting new lows for the fourth straight day, Pakistani rupee suffered yet another massive hit on Friday when the dollar rose to all-time high in the interbank market at Rs193.
The rupee’s weakest closings prior to this were 191.77, 190.02 and 188.66 during the last three days. It closed at Rs193 on Friday, rising by a rupee from the previous day’s close of Rs192. Within the open market, the rupee was traded at 194/195 per dollar against 193/194 a dollar a day earlier.
The rupee has shed Rs6.86 against the US dollar during the last six sessions. Overall, the rupee has depreciated by Rs35.04 against the US dollar during the ongoing fiscal year 2021-22 and Rs16.04 during the current year 2022.
The main reason behind this rapid depreciation of rupee is delay in finalisation of an agreement with the International Monetary Fund (IMF). Pakistani authorities and the IMF team will resume discussions over policies for completing the seventh review next week. Traders and markets are looking at the IMF as progress with the Fund instils investor confidence in the economy, stabilises Pakistan’s foreign exchange reserves, and unlocks funding from other international financial institutions.
The government’s indecisiveness over economic decisions is heavily weighing on the local currency. This sharp depreciation is also attributed to the prevailing uncertainty on the economic and political fronts. Moreover, the higher import bill is also weighing on the local currency. A widening trade deficit has put pressure on the country’s foreign exchange reserves as well, with the central-bank held level falling to below two months of import cover.
On the other hand, the total liquid foreign exchange reserves held by the country dropped to their lowest level since December 2019 at $16.4 billion in the week that ended May 6, from $16.5 billion a week earlier. The central bank’s reserves also decreased to a 23-month low to $10.308 billion, the SBP reported on Thursday last.
Taking to Twitter, Pakistan Tehreek-e-Insaf (PTI) Chairman and former prime minister Imran Khan highlighted that the rupee was at an all-time low of Rs193 [per dollar] (from Rs178 per dollar on March 8); interest rates at 15% highest since 1998; stock market down 3,000 points or 6.4%; stock market lost Rs604 billion capitalisation; inflation 13.4% — highest since January 2020. “Reflects lowest ever confidence in imported government,” he wrote.
“The market [is] awaiting policy [and] action, which [the] imported government has failed to provide. Both myself [and] Shaukat Tareen had warned the “neutrals” that if conspiracy succeeded our fragile economic recovery would go into a tailspin. That is what has now happened,” he added.
Meanwhile, former information minister Fawad Chaudhry criticised the new government for ignoring the economic crisis. “While the so-called government leaders are sitting in London, the US dollar has surpassed 193 […] this drama should end and the government should announce elections,” he wrote.
Replying to his criticism, Information Minister Marriyum Aurangzeb said that the dollar touched an “all-time high of Rs193 because of Imran Khan”.
“Imran Khan signed the IMF agreement and the people of Pakistan [are] suffering due to high inflation,” she said, blaming Imran Khan for causing economic instability in the country.