The rupee is expected to weaken further due to weak foreign currency reserves and a wide current account deficit, as traders remain skeptical of any ‘material’ reversal from the downward trend.
The foreign exchange reserves held by the State Bank of Pakistan (SBP) stood at $7.807 billion as of June 3 compared with $7.862 billion in the previous week.
“The forex market looks uneasy in coming days due to (debt) payment pressure,” a dealer said. “The rupee could touch 160/dollar next week.”
The rupee plumbed record lows in both the currency markets during the outgoing week, as the central bank pulled support to arrest decline in the currency to get the International Monetary Fund (IMF) board’s approval for a $6 billion bailout package.
During the week, the rupee in the interbank market fell 4.53 percent against the dollar.
In the official market, the rupee started on a negative note against the dollar, falling 1.0 percent or Rs1.50 to trade at 151.10 compared with the previous close of 148.60.
The local unit further dropped by Rs1.37 and closed at 151.47 in the second trading session. Extending losses on Wednesday, it ended at 151.56/dollar.
The downward trend persisted in the fourth trading session due to heavy dollars demand from importers and IMF’s debt repayment pressure. It slumped 0.88 percent to 152.90/dollar.
Pakistan has to make $80 million loan repayment to the IMF later this month, an analyst said.
The country had completed a three-year $6.4 billion loan program in 2016.
The currency weakened further due to lack of intervention from the State Bank of Pakistan on Friday. It hit an all-time low level of 156.90, closing the week at 155.84 versus the greenback.
In the open market, the rupee suffered major losses this week, enabling it to depreciate by Rs6.50 against the dollar.
In kerb dealings this week, rupee traded in the ranges of 150.50-157.
Traders are speculating that the rupee would become more volatile after the implementation of the IMF-supported extended fund facility.
Pakistan and the IMF reached a staff level agreement for the $6 billion loan program that is attached with conditions, including market-based exchange rate, for an approval. The rupee has lost 9.05 percent this year, after falling 37.05 percent in 2018.