Political uncertainty due to defeat of the ruling PML-N in the Punjab by-elections and import pressure took the Pakistani rupee to a new low against the US dollar in the interbank market on Monday.
Since the opening of the market the rupee has depreciated against the greenback by Rs3.79, as per the Exchange Companies Association of Pakistan. It remains to be seen where the local currency will settle at the end of the day’s trading. The dollar is currently being sold for Rs214.74 in the interbank market, bringing the local currency to an all-time low.
On June 21, the rupee had closed at a record low of 211.48 against the greenback and since then the currency has remained volatile.
Meanwhile, the benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) has also fell with the bears dominating the proceedings of the bourse. The index was trading at 41,341 points losing nearly 730 points by midday.
Pakistan-Kuwait Investment Company head of research Samiullah Tariq cited import payment pressure and political uncertainty as reasons for the rupee’s decline.
He said that Sunday’s by-election results gave clarity but the market is awaiting a strategy going forward.
“[The] market is looking for a direction, therefore investors are anticipating what would be the way forward. Will the coalition government announce early elections or not?” said Tariq.
On the other hand, Arif Habib Limited analyst Ahsan Mehnti admitted that the currency is depreciating but is hopeful that it would recover soon as all speculations are in favour of the local unit.
Mehnti believes that the funds that Pakistan will receive from the International Monetary Fund (IMF) following the staff level agreement will give the local currency a “much-needed breather”.