KARACHI: The Pakistani rupee continued to depreciate on Tuesday amid a deepening political crisis in the country, closing at 232.93 against a dollar in the interbank market.
The dollar closed at an all-time high with a fresh gain of 3.05, or 1.31%, against the local unit today, it surpassed the previous day's record high close of 229.88.
The local currency is under pressure for the past week amid heightened political tensions in the country after the July 17 by-polls in Punjab which the PTI won comprehensively. The Opposition alliance of PTI-PML-Q is now in a strong position to challenge the Shahbaz Sharif-led government in the Centre which has shaken the financial markets.
The dispute over the election of the Punjab chief minister landed in the Supreme Court after Deputy Speaker Dost Mohammad Mazari discarded 10 PML-Q votes polled in favour of Pervez Elahi, ruling that they were given in violation of “guidelines” as the party president Chaudhry Shujaat Hussain had directed them to vote for PML-N’s Hamza Shahbaz.
The apex court rejected the government’s demand to form a full court to hear the case after which the coalition partners announced a boycott of proceedings.
The rupee has been one of the world’s worst-performing currencies, slumping 30.2% since the start of the year (2022).
Ending July 22, the rupee experienced its worst week in more than two decades, indicating investors' anxiety amid concerns that a $1.2 billion loan disbursement from the IMF agreed last week might not be enough to ease the balance of payment crisis.
Fears of Pakistan defaulting over its foreign repayments still lurk in the market, despite the assurance of the central bank that the country would comfortably meet its financing needs as an International Monetary Fund (IMF) loan programme remains intact.
The rupee plunged around 8% last week, marking the sharpest weekly fall since October 1998.
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“Fears of default have ended and the policy makers also knew it,” says the finance minister