Dollar nears Rs203 as PKR loses 98 paisas against greenback

Expert says rupee will continue to lose ground against dollar till revival of IMF package


Salman Siddiqui May 26, 2022
PHOTO: FILE

KARACHI:

The Pakistani rupee registered yet another depreciation against the US dollar on Thursday as it dropped to almost Rs203 against the greenback in the interbank market amid dwindling foreign exchange reserves.

The rupee hit an intra-day low at Rs202.90 against the greenback at around 12:45 pm, showing a day-to-day drop of Rs0.98 from Wednesday's close of Rs201.92.

The local currency has cumulatively plunged 9.3% (Rs17.21) over the past 15 consecutive working days.

Experts said the delay in the IMF programme and a growing shortage of foreign currency spiked the country's default risk fivefold.

The country's risk of default, measured by credit default swap (CDS), has spiked to over 1,549 points on the global index, said Finance Ministry's former advisor Dr Khaqan Hasan Najeeb. Besides, yields on Pakistan's Eurobond in global markets also soared to 26-27 per cent.

Read Fate of IMF talks hinges on PM’s ‘big nod’

"The rupee would maintain its downward trend until the IMF resumes its $6 billion loan programme for Pakistan," Pak-Kuwait Investment Company Head of Research Samiullah Tariq said.

Pakistan-IMF's Doha talks (May 18-25) ended inconclusively for now and the programme has been delayed.

Pakistan direly needs the IMF loan programme to increase its capacity to make international payments and avert the risk of default on global payments.

The global lender had conditioned the revival of the loan programme with the withdrawal of subsidies on petroleum products and electricity. Finance Minister Miftah Ismail however had ruled out an increase in international energy prices as the action would spike inflation.

Meanwhile, Pakistan's foreign exchange reserves depleted to a critically low level of six-week import cover at $10.1 billion.

Islamabad is estimated to record a net outflow of over $7 billion from the reserves in May and June, as it is scheduled to repay maturing global bonds worth $4.5 billion and another $3 billion to finance the current account deficit by end of June 2022.

COMMENTS

Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ