Rupee weakens further

KARACHI: The rupee extended falls for a twelfth consecutive session in the interbank market on Thursday, dealers said.

In the interbank market, the rupee ended an all-time low of 202.01 per dollar, compared with Wednesday’s close of 201.92.

The local unit fell by 50 paisas to 203.50 against the dollar in the open market.

The rupee remained under pressure as Pakistan and the IMF failed to reach a staff level agreement for the revival of the loan programme due to the government's indecision on withdrawing fuel subsidies.

Also, political uncertainty in the country is adding to the pressure on the currency.

The country needs to get the release of $3 billion from the IMF. Those funds bolster its forex reserves, which have fallen to $10.1 billion enough to meet the cost of less than two months of imports. The country is struggling with a soaring trade deficit fueled by higher imports.

And, the rising yields on Pakistan international bonds indicate investor concern on the precarious country’s balance of payments position and increased risk that borrowers may face problems in future meeting external obligations if they worsen further.

These fears have led to the weakening of the local unit, which has depreciated by 18 rupees since the ruling coalition took office last month. The fast weakening of the currency has also stoked inflationary pressures, which surged to 13.4 percent in April from 12.7 percent in the previous month.