Rupee slumps to 232.93 against US dollar

Analysts attribute currency volatility to political uncertainty


Our Correspondent July 27, 2022
PHOTO: AFP/File

KARACHI:

Pakistani currency continued to sink for the seventh consecutive working day on Tuesday, as it slumped 1.31% (or Rs3.05) to a new all-time low at Rs232.93 against the US dollar in the inter-bank market in the wake of growing political uncertainty.

The rupee briefly crossed Rs235 against the greenback during the day, currency dealers said. The currency had closed at Rs229.88 on Monday, according to the State Bank of Pakistan (SBP).

With the latest drop, the rupee has cumulatively plunged 10.40% (or Rs21.97) in the past seven successive working days. Analysts were of the view that growing political uncertainty had extended the volatility in the rupee in the backdrop of economic gloom and doom.

The expected change in the political landscape after the court ruling on Punjab’s chief minister election held last week, mounted pressure on the rupee.

In case, the PTI candidate for the CM slot replaced the PML-N CM Hamza Shehbaz, then early general elections could not be ruled out. This may keep the economy under pressure. Earlier, Finance Minister Miftah Ismail said the rupee would come out of the mounting pressure next week once the ongoing import payments were made.

The import bill has been cut down in the ongoing month of July, compared to the elevated one that stood at $7.7 billion in the previous month of June 2022.

The fast falling foreign exchange reserves and temporary recess in foreign financing has also mounted pressure on the rupee against the US dollar.

The country, however, has reached a staff-level agreement with the International Monetary Fund (IMF). It may formally resume its multibillion-dollar loan programme for Pakistan in August, when the IMF executive board is scheduled to meet.

The country’s foreign exchange reserves have dropped to critically low levels at $9.3 billion providing less than six weeks of import cover. The government claimed that it had fully arranged foreign financing requirement for the current fiscal year 2023.

Published in The Express Tribune, July 27th, 2022.

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