Rupee hits record low of 241 against dollar in kerb market

KARACHI: The rupee tumbled to yet another lifetime low of 236.02 to the dollar in the interbank market on Wednesday due to the persistent uncertainties surrounding the economy and politics.

The rupee closed at 232.93 per dollar on Tuesday. It fell by 1.31 percent during the session.

The local unit has been under pressure on the back of scarcity of dollars amid dried up foreign currency inflows. The Supreme Court verdict to declare PML-Q’s leader Pervaiz Elahi as the new CM of the province triggered a fresh bout of political uncertainty in the country.

“Till the time political tension will not be settled, the dollar slide will not come to arrest,” said Awais Ashraf, head of research at Foundation Securities.

The local unit shed 4 rupees to hit a fresh record low of 241 versus the greenback in the kerb market. “The currency is under pressure due to higher demand for the dollar in the market. In addition, delay in the IMF programme along with the commitment from friendly countries is also causing pressure on the currency market,” said Tahir Abbas, the head of research at Arif Habib Limited.

Finance Minister Miftah Ismail shared a JP Morgan report on his Twitter account, which said Pakistan will not default on its payments.

“With austerity and reform measures taken in the budget and since the budget, the IMF agreement and progress with other multilateral institutions, our bonds are a safe and smart investment,” the Tweet said.

However, this statement didn’t work to soothe the investors’ nerves.

Analysts see political instability as a continual risk to Pakistan’s economy. Worries about Pakistan’s financing needs, a huge current-account deficit, and stubborn inflation are now compounded, which will keep the local currency under a lot of pressure.

Fears about Pakistan’s faltering economy have increased as the rupee dropped by 33 percent versus the dollar since January this year, its foreign exchange reserves decreased to $9.3 billion as of July 15, and inflation is at its worst level in more than a decade.

In the international market, the dollar is strengthening against all other world currencies, and the rupee is no exception. Even though imports are reducing, Pakistan’s external account concerns have not yet been resolved.

Although, the International Monetary Fund has agreed to disburse a $1.2 billion loan disbursement, the inflows have not yet occurred because the executive board’s final approval is still pending.