Rupee slides to historic low of Rs 202.01 against dollar

KARACHI: The Pakistani rupee shed nine paisas to reach an all-time low of Rs202.01 on Thursday as the government failed to secure a deal with the International Monetary Fund.

The local unit fell 9 paisas to close at Rs202.01 to the dollar from Wednesday’s closing of Rs201.92 in the interbank foreign exchange market. The rupee recorded the previous historic low of Rs201.92 on May 25, 2022.

The negotiations between the government and the IMF have stalled further on the back of the government’s decision to maintain subsidies on the prices of fuel and electricity, the dealers said.

The reports regarding Saudi Arabia finalising the extension of the kingdom’s $3 billion deposit to Pakistan, were expected to boost the investors’ confidence in the local economy and the value of the rupee, however the foreign exchange reserves of the country declining to an alarming level kept the rupee under pressure.

Pakistan can boost the investors’ confidence by the successful completion of the talks with IMF, which is also significant in getting funds from other multilateral lenders.

The country received record remittance of $3.1 billion during the month of April, however, the reducing forex reserves pose a significant threat to the stability in the value of rupee.

The foreign exchange reserves held by the SBP were down $145 million to $10.16 billion on a weekly basis, compared with $10.30 billion on May 6, according to data released by the central bank.

The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $16.16 billion, while the net reserves held by banks amounted to $5.99 billion.

The widening current account deficit is another vital factor in the escalation of the dollar value. Pakistan’s trade deficit showed a sharp growth to $3.64 billion in March 2022, registering an increase of 12 per cent over the same month of the last fiscal.

The total trade deficit escalated to $35.52 billion in the first nine months (July-March) period of the current fiscal year against $20.8 billion in the same period last fiscal year.

The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs 44.47 or 28.22 per cent from Rs 157.54 to dollar on June 30, 2021 to the current level of Rs 202.01.

At the open market, the buying and selling of the dollar was recorded at Rs 201.5 and Rs 203.5 at 4:45 pm PST.