The Pakistani rupee against dollar crashed again on the interbank market
During intraday trade on the interbank market on Tuesday, the Pakistani rupee against dollar hit a new low, keeping the financial market on edge in the midst of an ongoing political crisis.
The local unit is currently trading at 233 on the interbank market, up from 229.88 a day ago.
According to The News, since the beginning of the year (2022), the rupee has been one of the worst-performing currencies in the world, falling 30.2%.
Tahir Abbas, the head of research at Arif Habib Limited, stated, “Shortage of dollars, political and economic uncertainty, and ambiguity regarding commitment from friendly countries, which is required for disbursement of the IMF tranche, were the causes of the rupee’s persistent decline.”
SBP discourages interbank trading in order to contain dollar shortage
As political unpredictability persists, the rupee hits a record low against the dollar.
The Pakistani rupee hits a new low against the US dollar of 215.20 due to “political uncertainty.”
In the last trading week, Pakistan’s currency fell nearly 8% against the U.S. dollar, while the country’s foreign reserves are below $10 billion and inflation is at its highest level in more than a decade. As a result, fears have increased regarding Pakistan’s faltering economy.
Why Pakistani rupee against dollar going to Crash
Alpha Beta Core’s chief executive officer, Khurram Schezad, told Geo.tv that the dollar is gaining strength in the global market relative to nearly all major currencies, including the rupee.
Moreover, he stated that Pakistan’s external account issues are not yet resolved, despite the fact that imports are decreasing.
He noted that although the International Monetary Fund is on board for disbursement, the flows have not yet materialised because the Executive Board’s final approval is pending.
“Global rating agencies have assigned a negative outlook to the economy, so this is an additional burden that is weighing on the financial markets and forex market,” he added.
Muhammad Saad Ali, a capital market expert, told Geo.tv that the increase in political uncertainty — whether the current government will remain in office long enough to stabilise the economy and who governs the Punjab province — is causing the rupee to decline.
“Note that balance of payments pressures on the currency have eased, according to the central bank, which claims that Pakistan has sufficient capital commitments for the next 12 months to cover its dollar outflows,” he stated.
“I reiterate that political uncertainty is weakening market sentiment and contributing to further rupee depreciation,” Ali continued.
