On Tuesday, the rupee plummeted to a historic low, experiencing a 0.6% depreciation against the US dollar in the interbank market due to the relaxation of import restrictions, leading to heightened demand for the dollar.
The local currency declined by 1.87 against the greenback, with an intraday trade value of 299, as reported by the Exchange Companies Association of Pakistan (ECAP). Its previous all-time low was 298.93, recorded on May 11.
In the preceding day, the rupee had closed at 297.13 against the dollar, compared to Friday’s closure at Rs295.78.
Tahir Abbas, the Head of Research at Arif Habib, expressed his anticipation that the rupee would fluctuate within the range of 295 to 305 against the dollar for the foreseeable future. He attributed the declining trend primarily to the relaxation of import restrictions and the clearance of backlogs for goods and services. This, in turn, facilitated the outflow of rupees as multinational corporations repatriated some profits.
Providing insight into the situation, AA Commodities Director Adnan Agar told Media that the devaluation of the rupee is largely influenced by political factors. There are concerns about potential delays in the general elections, which could subsequently postpone the fulfillment of commitments from the International Monetary Fund (IMF) and other global lenders.
“With ongoing political uncertainty, especially with a caretaker government in control, questions arise regarding investment and lending prospects for the country,” he explained.
further stated that this uncertainty is the driving force behind the rupee’s decline, and the situation is likely to persist until there is more clarity in the political landscape
