The Pakistani rupee continued its downward spiral against the US dollar in the interbank market during intraday trade on Thursday, despite assurances by Finance Minister Miftah Ismail that pressure on the rupee will ease in a couple of weeks.
The rupee was trading at Rs240 against the US dollar in the interbank market during intraday trade amid the ongoing economic and political uncertainty in the country.
The domestic currency lost 3.98 during the intraday trade. It closed at 236.02 a dollar a day ago. It fell by 1.31% during the session.
Meanwhile, the dollar soared by Rs4 and traded at Rs245 in the open market for some time.
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.
Alpha Beta Core CEO Khurram Schezad said that the dollar is getting stronger in the global market almost against all the world currencies — and the rupee is not an exception.
In addition, he said, Pakistan’s external account issues are not settled as yet though imports are slowing.
He noted that although the International Monetary Fund is on board for disbursement, the flows are yet to materialise as the Executive Board’s final approval is awaited.
“Global rating agencies have put a negative outlook on the economy, so that is an additional burden that is weighing in on the financial markets in general and forex market in particular,” he added.
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.