KARACHI:
On Tuesday, the Pakistani rupee hit a new low of Rs299 per US dollar in the interbank market.
The current drop in the value of the rupee will increase the cost of imports and increase the amount of money needed to pay down maturing foreign debt.
As the US dollar strengthened internationally and in domestic demand, the value of the local currency decreased in comparison.
The “Pakistani rupee touches all-time low…at Rs298.9/$,” as reported by Arif Habib Limited.
Remember when in May 2023, after former prime minister Imran Khan was jailed for the first time, the country’s law and order situation worsened, and the exchange rate touched a record low of Rs298.93/$?
According to the research firm, the rupee fell to a new all-time low of Rs313/$ in the open market, increasing the gap between the two markets’ exchange rates to Rs14 (about 4.5%) and therefore violating a condition of the IMF loan program that the gap be kept at 1.25% (approximately Rs4) or less.
Since the caretaker government took office last week, the exchange rate between the rupee and the dollar has reportedly been predicted to fluctuate around Rs300/$.
However, Director of Research at Chase Securities Yousuf M. Farooq told The Express Tribune on Monday that the currency should stabilize around its present level.
After massive inflows of capital from around the world into US treasury notes, the value of the dollar rose to a level not seen in over two months.
In contrast, Pakistan has lifted all import restrictions, driving up domestic demand for U.S. dollars even as the country’s foreign exchange reserves, at $8 billion, are still below the level needed to finance imports for two months.
According to market watchers, the local currency is under pressure since merchants are finally paying for their overdue imports.
According to experts, import demand continues to outstrip total revenues from exports and remittances from overseas employees. As a result, after being in surplus for four straight months (March through June 2023), the current account balance fell into deficit by more than $800 million in July.
