Rupee dives to historic low of Rs 205.16

KARACHI: The Pakistani rupee plunged to the historic low of Rs205.16 against the dollar on Tuesday amid uncertainty regarding the International Monetary Fund (IMF) programme besides depleting foreign exchange reserves of the country.

The local unit shed Rs1.31 to close at Rs205.16 to the dollar from Monday’s closing of Rs203.85 in the interbank foreign exchange market. The rupee recorded the previous historic low of Rs203.85 on June 13, 2022.

The dealers said that the rupee is in a free-fall against the dollar as the uncertainty regarding the resumption of the IMF dented the confidence of investors and traders.

Additionally, a high dollar demand for import payments was witnessed ahead of the fiscal year’s end, besides global economic slowdown and elevated global commodity prices, which kept the local unit under pressure.

Previously, Finance Minister Miftah Ismail on Saturday said that the International Monetary Fund (IMF) was not happy with the budget, mainly because the government did not implement Personal Income Tax (PIT) measures suggested by the fund, while the government has not had any success to secure a rollover of Chinese and other friendly countries’ loans to provide some respite to the local currency.

The inflows from IMF and friendly countries will help in building foreign exchange reserves of Pakistan, which have already fallen to a 30-months low.

The official foreign exchange reserves of the State Bank of Pakistan (SBP) declined $497 million to reach $9.22 billion by the week ended June 3, 2022, compared with $9.72 billion a week ago.

Previously, the foreign exchange reserves held by the central bank were recorded at $9.23 billion on December 6, 2019.

The foreign exchange reserves held by the central bank witnessed a record high at $20.14 billion by the week ended August 27, 2021. Since then, the central bank’s foreign exchange has witnessed a continuous decline. The official reserves of the SBP fell around $10.92 billion by the week ended June 3, 2022 from touching the peak.

The widening current account deficit is another threat to the stability of the local unit. 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 Rs47.62 or 30.22 per cent from Rs157.54 to dollar on June 30, 2021 to the current level of Rs205.16.

At the open market, the buying and current of the dollar was recorded at Rs 204.5 and Rs 206.5 at 4:45 pm PST.