KARACHI: The Pakistani rupee on Thursday broke all previous records against the US dollar and hit an all-time low of Rs 191.77 in the interbank market.
The local currency fell by Rs 1.7 (or 0.91%) to close at Rs 191.77 during the day, hitting a record low of Rs 188.66 on Wednesday.
Delays in the resumption of the International Monetary Fund (IMF) bailout and a lack of financial support from friendly countries are increasing the pressure on the local unit due to the dry currency.
The decline was in line with the predictions of analysts who fear further losses on the road as the country is mired in political and economic instability.
The day before, the rupee crossed the critical level of Rs 190 amid a steady decline in foreign exchange reserves due to heavy current account and trade deficit, and high debt payments.
From the beginning of this financial year (July 1, 2021) to date, the rupee has fallen by a total of 21.72% (or Rs. 34.23) to Rs. 157.54 as compared to the close of the previous financial year.
The rupee has maintained a bearish trend for the last 13 months. This is a decrease of 25.94% (or Rs. 39.5) till date as compared to the record high of Rs. 152.27 recorded in May 2021.
Furthermore, political unrest due to the PTI’s anti-government protest campaign is focusing on extinguishing the economic fire of the new economic team. Former Prime Minister Imran Khan has announced to march towards Islamabad with millions of his supporters after May 20 to hold fresh elections to add to the woes of the economically troubled PML-N-led government. Be demanded
Markets are also eyeing the results of a meeting between Prime Minister Shahbaz Sharif and top PML-N leaders in London with party supremo Nawaz Sharif as the new government seeks energy to resume IMF loan talks on May 18. When will the subsidy be withdrawn? Will agree to announce new elections or not.
‘Early elections will be a disaster’
However, on Twitter, economist Qaiser Bengali said early elections would be a “catastrophe” before inflation and the dollar stabilized.
Meanwhile, former finance minister Hafiz Pasha said that the only way out of the economic crisis was to talk to the IMF as soon as possible otherwise the rupee could depreciate further.
Uncertainty about IMF loan program
The day before, talking to Geo.tvArif Abbas Limited’s Head of Research Tahir Abbas had said that there are two major reasons for the value of rupee. “First, because of the uncertainty surrounding the resumption of the IMF loan program. Second, the depletion of foreign exchange reserves,” he said.
The analyst added that the lack of direction and clarity on the government’s economic strategy, the delay in deciding on the IMF’s preconditions – including the elimination of subsidies and the increase in petrol and electricity prices – Rising commodity prices in the international market have affected sentiment. Of the market.
Abbas had said: “Due to the uncertainty over the IMF program, other friendly countries have also stated that the loans are dependent on meeting the conditions of the IMF, which has led to the already depreciating value of the currency. It is also having an effect. “
“The government needs to develop a clear economic roadmap,” he stressed.