Rupee continues to take battering, reaches another historic low

KARACHI: The Pakistani rupee has maintained its downward streak for the last few sessions now, as it crossed Rs192 against the US dollar on Friday, amid rapid depletion in foreign exchange reserves and uncertainty over the revival of the International Monetary Fund (IMF) programme.

The rupee was trading at Rs193 during intraday trading; however, with a loss of Rs0.76, or 0.4%, the local unit closed at Rs192.53 on Friday. 

The slide of the local unit was weighed down by a surging trade deficit, dwindling foreign exchange reserves — that dropped to their lowest level since December 2019 — and a delay in the release of the IMF tranche.

Speaking to Geo.tv, Exchange Companies Association of Pakistan (ECAP) Chairman Malik Bostan said that the widening trade deficit and political uncertainty are adding pressure on the dwindling rupee.

“When the new government took charge, the rupee recovered to Rs181 from a record high-level of Rs189; however, after ousted prime minister Imran Khan announced to hold a long march, the rupee once again broke all records,” he said.

Bostan maintained that if the political crisis continues, the “situation will get out of hand”.

Regarding the IMF programme, the analyst added that talks with the Fund are very important and the government needs to take some tough decisions to revive the stalled programme.

“The State Bank of Pakistan [SBP] also needs to take action to control the free fall of the Pakistani rupee,” he said, adding that the rupee rate cannot be determined by the demand and supply regime.

He also maintained that the rupee-dollar parity would also improve if Imran Khan decided to take back his long march call. “The new government should focus on fixing the economic situation rather than being involved in political debates with the former PTI-led government,” he said.

The analyst predicted that the dollar value would move up to the 195-mark; however, its value will decline significantly later.