The Pakistani rupee continued on Tuesday to lose ground against the US dollar and hit a new low during intraday trade in the interbank market, keeping the financial market jittery amid an ongoing political crisis.
The local unit is trading in the interbank market at 232.97, up from 229.88 a day earlier.
The rupee has been one of the world’s worst-performing currencies, slumping 30.2% since the start of the year (2022).
Tahir Abbas, the head of research at Arif Habib Limited, said: “Shortage of dollars, political and economic uncertainty tagged with ambiguity regarding commitment from friendly countries, which is needed for disbursement of IMF tranche were the reasons behind rupee’s persistent slide.”
Fears have risen about Pakistan’s stuttering economy as its currency fell nearly 8% against the US dollar in the last trading week, while the country’s forex reserves stand below $10 billion with inflation at the highest in more than a decade.
Muhammad Saad Ali, a capital market expert, said that the rise in political uncertainty — of whether the present government will remain in office long enough to stabilise the economy and the continued confusion around who governs the Punjab province — is causing the rupee to slip.
“Note that balance of payments pressure on the currency have eased, as per the central bank, which asserts that Pakistan has enough capital commitments for the next 12 months to take care of its dollar outflows,” he said.
“I reiterate political uncertainty is weakening market sentiment and leading to more rupee depreciation,” Ali added.