Rupee plunges to all-time low against dollar

• The rupee plunged to an all-time low against the dollar to reach Rs285.09 at the closing of the interbank.
• The local currency previously recorded the all-time low of Rs276.58 on February 3, 2023.
• The local currency also fell due to a delay in the IMF programme.

KARACHI: The rupee plunged to an all-time low against the dollar to reach Rs285.09 at the closing of the interbank foreign exchange market on Thursday.

The local unit recorded a dip of Rs18.98 in a single day to reach Rs285.09 against the dollar from the previous day’s closing of Rs266.11 in the interbank foreign exchange market.

The dealers said that a delay in the IMF loan programme and a downgrade of the currency rating resulted in a massive fall in the rupee value.

The local currency previously recorded the all-time low of Rs276.58 on February 3, 2023.

Moody’s Investors Service downgraded the government of Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to Caa3 from Caa1.

Moody’s has also downgraded the rating for the senior unsecured MTN programme to (P) Caa3 from (P) Caa1. However, Moody’s has also changed the outlook to stable from negative.

The decision to downgrade the ratings is driven by Moody’s assessment that Pakistan’s increasingly fragile liquidity and external position significantly raises the default risks to a level consistent with a Caa3 rating.

Besides, the local currency also fell due to a delay in the IMF programme, owing to non-compliance by the country with the loan conditions.

The country’s foreign exchange reserves depleted sharply during the last one year and presently at an alarming level. However, in the last two weeks, the official reserves slightly increased, giving some breathing space to the local currency.

The official foreign exchange reserves of the State Bank of Pakistan (SBP) increased $65 million to $3.258 billion by the week ended February 17, 2023, compared with $3.193 billion a week ago.

The current level of the official foreign exchange reserves are only to provide import cover for around two weeks, or 19 days.

The import bill for January 2023 has been recorded at $4.856 billion, as per the Pakistan Bureau of Statistics (PBS). The benchmark foreign exchange reserves of a central bank should be at a level to provide three months of import cover.

The official foreign exchange reserves of the SBP fell sharply to an almost nine-year low. Previously, the official forex reserves of the SBP were seen at $3.19 billion in February 2014.

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