US dollar continues to lead race with Pakistani rupee in interbank trade early on Tuesday and rose by 1.64 to ascend new high of 205.50.
According to the State Bank of Pakistan (SBP), rupee had closed at an all-time low of Rs203.86 a dollar on Monday.
The local currency dipped to an all-time low against the greenback owing to a delay in the revival of the International Monetary Fund’s (IMF) $6 billion loan programme.
However, $2.4 billion in financial assistance from China coupled with the constant assurances by Finance Minister Miftah Ismail regarding economic stability slightly arrested the rupee’s slide.
Today’s rupee decline was in line with the expectations of the market, with dealers anticipating the domestic currency to fall further in case Pakistan fails to convince the IMF about its budget proposals.
A day ago, the IMF had said that additional measures were needed to bring Pakistan’s budget for the next fiscal year 2022-23 in line with the key objectives of its programme.
Arif Habib Limited head of Research Tahir Abbas recalled that the finance minister, in the post-budget press conference on Saturday, said that the IMF had expressed concerns about the budget numbers, including fuel subsidies, a widening current account deficit, and the need to raise more direct taxes.
The analyst said: “Uncertainty in the market has begun since then.” He identified import payment pressure as another key factor behind this decline.
Abbas predicted that the local currency would stay volatile during June, the last month of the outgoing fiscal year 2021-22.