The Pakistani rupee lost ground against the US dollar on Wednesday in the interbank market, slumping to 210.
The decline came after the government decided to reduce the price of petroleum products, leading to uncertainty in the market over the revival of the International Monetary Fund (IMF) programme.
Since the beginning of the last fiscal year (July 1, 2021), the rupee has dropped by a massive 31.97% (or Rs50.37) compared to the previous fiscal year’s close at Rs157.54.
Pakistan-Kuwait Investment Company head of research Samiullah Tariq said that two factors were driving the market — the strengthening of the dollar and impending payments.
“The first is the strength of the dollar against other currencies as demonstrated by DXY […] the second is impending payments, as due to Eid holidays, factories were closed,” he said.
Tariq said that the remittance inflow was strong before Eidul Azha as overseas Pakistanis send money to their families ahead of the festive season.
But post-Eid, Tariq said, the remittances have dried up.
In the view of Alpha Beta Core CEO Khurram Schehzad, a 1% or 2% daily volatility was not unusual, but he noted that the finalisaion of the IMF programme will help stabilise the currency market.
He noted that it was a “good thing” that the oil rates were declining in the international market, which will eventually help reduce demand for dollars in the local market for imports.
Before the market closed for five days, the Pakistani rupee gained 0.04% against the US dollar and ended interbank trade at 207.91 on Thursday.