The Pakistani rupee continued to fall against the dollar for the third consecutive session on Friday, losing Re1 during morning trade in the interbank market.
The local currency was changing hands at Rs222.5 per dollar at 11:35am, a depreciation of 0.45 per cent from yesterday’s close of Rs221.5, data shared by the Forex Association of Pakistan (FAP) showed.
Since the start of this fiscal year, the PKR’s value has declined by Rs16.64 or 7.52pc, according to data compiled by Mettis Global.
The PTI’s lengthy march, which is scheduled to start today, has “dampened sentiments once again,” according to Tresmark’s Head of Research Komal Mansoor, and as a result, the value of the rupee is declining.
In addition, investors prefer to maintain their dollar investments due to the increased risk profile, she said.
Early this week, the probability of a sovereign default grew to its highest level since November 2009. On October 25, the country’s five-year credit default swap (CDS), a kind of protection against the possibility of a sovereign default, climbed by more than three percentage points to reach 52.8pc, a 13-year high.
The rising CDS level is reflective of investors’ dwindling confidence in Pakistan’s ability to pay back its international loans.
FAP Chairman Malik Bostan also attributed the rupee’s fall to the long march and political instability. He said importers were buying the greenback out of fear that the dollar’s rate would go up while banks were also purchasing it at higher rates, which was pushing up prices.
Furthermore, according to Bostan, exporters were keeping their gains abroad in the hope that the dollar’s value would increase, bringing about bigger profits.
The FAP chairman advocated communication between the government and opposition parties to resolve differences, expressing concern that the rupee could plunge to new lows if political unrest persisted.