Rupee decline continues, slumps to Rs 239.94

KARACHI: The Pakistani rupee slumped to the historic low of Rs239.94 against the dollar on Thursday as the economic and political condition of the country worsened.

The local unit shed Rs 3.92 to close at Rs239.94 to the dollar from Wednesday’s closing of Rs 236.02 in the interbank foreign exchange market.

The analysts attributed the political and economic uncertainty to the continuous decline in the value of the rupee. The speculations regarding the approval of the executive board of the International Monetary Fund (IMF) for the disbursement of the funds under the Extended Fund Facility (EFF) is also a concern for the investors, they said.

Pakistan is going through one of the worst crises in its history where the government is finding it difficult to provide any kind of stability to the economy while the political environment also heated up which dampened the confidence of the traders and investors, they added.

Fitch Ratings agency has also downgraded Pakistan’s outlook from stable to negative in view of the significant deterioration in the country’s external liquidity position and financing conditions since early 2022.

The shrinking foreign exchange reserves of the country also kept the market under pressure. The foreign currency reserves held by the State Bank of Pakistan (SBP) recorded a decline of $389 million to reach $9.32 billion during the week ended July 15, compared with $9.71 billion on July 7.

The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $15.24 billion. The net reserves held by banks amounted to $5.91 billion.

The current account deficit remains one of the key challenges for the stability of the rupee, as after moderating in the previous three months, it rose to $1.4 billion in May, on the back of lower exports and remittances partly due to the Eid holiday.

The trade deficit rose to $4.8 billion in June, more than $1.7 billion higher than its February low. While non-energy imports have continued to moderate in the last three months on the back of curtailment measures by the government and the SBP.

The local currency remained under pressure since the start of the current fiscal year. The rupee lost Rs35.09 or 17.12 per cent from Rs204.85 to dollar on June 30, 2022 to the current level of Rs239.94.

At the open market, the buying and selling of the dollar was recorded at Rs 43 and Rs 246 at 3:30pm PST.