- Pakistani rupee trading at Rs183.5 against greenback in inter-bank market.
- Higher dollar demand from importers pushes US dollar higher.
- Local currency dropped to an all-time low of Rs188.18 on April 7.
KARACHI: The Pakistani rupee fell on Tuesday as higher dollar demand from importers pushed the US dollar higher.
The local currency was trading at Rs183.5 against the greenback in the inter-bank market during intra-day trade as importers rushed to buy dollars and concerns over weak economic fundamentals weighed in on the sentiment.
Currency dealers say the rupee has been under pressure since yesterday (Monday) due to import payments. Moreover, the outlook seems bleak on the back of a stalled International Monetary Fund (IMF) programme, the widening of the trade deficit and depleting foreign exchange reserves.
The rupee had been under pressure since the beginning of March when the then Opposition submitted the no-confidence motion against the then prime minister Imran Khan. The domestic currency dropped to an all-time low of Rs188.18 on April 7 after Khan dissolved the Parliament and called fresh elections in a bid to block an opposition attempt to oust him.
This caused a political crisis in the country. The rupee started recovering on April 8, following a big 250 basis points hike in interest rates by the central bank and the change of government in the country.
Earlier, Ismail Iqbal Securities Head of Research Fahad Rauf said the local unit’s recovery was linked to political clarity but fundamentals still remain the same.
“The reserves are depleting, less than two months of import cover. Commodity prices, especially crude oil price, have been increasing again, while the IMF programme is also on hold,” he added.
Furthermore, the market still awaits positive news on the rollover of $2.4 billion in debt from China. It is necessary for Pakistan to begin discussions with the IMF for the completion of the seventh review of a $6 billion Extended fund Facility (EFF) as the forex reserves are just enough to cover 1.6 months of imports.
Courtesy : GeoNews