In the prolonged wait for a breakthrough in talks with the International Monetary Fund (IMF), Pakistani rupee hit a new record low for the second consecutive day on Wednesday.
According to the State Bank of Pakistan (SBP) data, the rupee maintained its downturn for the fourth successive working day, losing a cumulative 1.50%, or Rs4.19, to an all-time low at Rs287.85 against the US dollar in inter-bank market.
The currency has remained under pressure amid low supplies of the US dollar coupled with pent-up demand for imports.
Market talk suggests some pundits were expecting a partial recovery of the rupee after the central bank jacked up the benchmark policy rate by 100 basis points (bps) to a record high at 21%.
Pakistan’s critically low foreign currency reserves of $4.24 billion, the upcoming foreign debt repayments and rising import demand all pulled the rupee down.
Experts said that heightened political instability and economic meltdown were the leading reasons for the continuous delay in revival of the IMF’s $6.5 billion loan programme.
The rupee dropped on Wednesday despite State Bank Governor Jameel Ahmad’s announcement a day ago that friendly countries would make financial commitments, which was the last condition of the IMF for resuming its programme.
He hoped that the foreign exchange reserves would cross $10 billion by the end of June 2023, once the government struck a staff-level agreement (SLA) with the IMF.
Analysts voice hope that the rupee will make a partial recovery after the resumption of loan programme, which has remained on hold since November 2022.
Finance Minister Ishaq Dar, along with his economic team, is going to visit the US from April 10 to 16 to attend annual meetings of the IMF and World Bank, where he is also expected to talk about the IMF programme.
Gold at new peak
Gold hit a new record high for the second consecutive day on Wednesday, touching Rs217,000 per tola (11.66 grams). The All Pakistan Saraf Gems and Jewellers Association (APSGJA) reported that the bullion price rose by Rs2,500 per tola in a day.
The increase came in line with the uptrend in global markets. The metal’s price soared $41 to $2,023 per ounce (31.10 grams) in the international market.
Rupee’s depreciation also caused the rise in the price of precious metal in the country.
Published in The Express Tribune, April 6th, 2023.
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