Rupee nosedives to 215.20 against US dollar

Pakistani rupee nosedived Rs4.25, or 1.97%, in a single day and hit an all-time low at Rs215.20 against the US dollar in the inter-bank market on Monday. The currency lost significant ground in the backdrop of continuing political uncertainty and poor macroeconomic situation. A day ago, Pakistan Tehreek-e-Insaf (PTI), led by former premier Imran Khan, won a large number of seats in by-elections in Punjab, which changed the country’s political scenario once again.

The rupee breached the previous record low of 211.93 to a dollar touched on June 22. The currency has come under significant pressure over the past many months as demand for the dollar stood quite high and the State Bank’s foreign currency reserves declined steadily. The demand for the greenback has mainly stemmed from the surging imports, which rose to around $80 billion in fiscal year 2021-22, and the need for making debt repayments. The rupee plunged after having some recovery in recent days as Pakistan was expected to receive around $1.2 billion in the next loan tranche from the International Monetary Fund (IMF).

Resumption of the loan programme will unlock inflows of foreign currencies from other multilateral and bilateral sources as well and improve the country’s capacity to make international payments. Apart from that, China rolled over its loan of $2.3 billion for Pakistan and deposited it in the State Bank a few weeks ago. In line with the rupee fall, the Pakistan Stock Exchange (PSX) slumped 770 points in intra-day trading on Monday. The capital market came under renewed pressure in the wake of “political and economic uncertainties in Pakistan,” an expert said.