KARACHI: The Pakistani rupee fell further and traded at 237 to the dollar in the interbank market during intraday trade on Wednesday amid a deepening political crisis in the country.
Local unit lost Rs4.07 today – the first exchange session after the Supreme Court withdrew PML-N Hamza Shahbaz as chief minister for Punjab, dealing a massive blow to the Shahbaz Sharif government in the Centre.
A day earlier, the rupee had closed at Rs 232.93. The rupee has been one of the world’s worst performing currencies, falling more than 30 percent since the start of the year (2022).
Deepening political uncertainty and a lack of dollar liquidity put pressure on the local unit, according to currency traders.
“Banks are short of foreign currency because the central bank is not selling dollars in the market to avoid exchange rate fluctuations. Exporters are also not converting dollars and this is resulting in a shortage of greenbacks. happening,” Forex Trader.
“Some banks are opening new letters of credit if the outflow is equal to the clients’ export earnings.”
Concerns about Pakistan’s shrinking economy have grown as the local currency fell nearly 8 percent against the U.S. dollar last week, its foreign exchange reserves fell to $9.3 billion as of July 15 and inflation hit a decade-high. It is at its worst level in a long time.
In the international market, the dollar is strengthening against all other global currencies, and the rupee is no exception. Despite the decrease in imports, the concerns about Pakistan’s external accounts have not gone away.
Although the International Monetary Fund (IMF) has agreed to disburse a $1.2 billion loan, the funds have yet to flow in as the final approval by the Executive Board is still pending.
Global rating agencies have given a gloomy outlook to the economy, hence this is an additional burden on the financial markets in general and the forex market in particular.
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