Rupee slumps to historic low of Rs188.66 against dollar

• Rupee surpasses its April 7 record low of Rs188.18.
• Uncertainty over resumption of IMF programme takes a toll on rupee.
• Since July 1, 2021, rupee has dropped by nearly Rs30.

 KARACHI: The Pakistani currency depreciated by Rs0.60 to an all-time low of Rs188.66 against the US dollar in the interbank market on Tuesday as looming uncertainty over the resumption of the International Monetary Fund (IMF) loan programme took a toll on the local unit.

The local currency surpassed its April 7 record low of Rs188.18.

Currency dealers believe that a delay in the IMF programme, lack of immediate financial support from friendly countries, depleting foreign exchange reserves and surging trade deficit kept the pressure on the domestic currency.

The new government’s reluctance to remove subsidies on fuel and electricity — which are the pre-conditions for the revival of the IMF programme — dampened investors’ sentiment.

Moreover, investors are concerned about the falling foreign currency reserves — as the inflows from remittances and export proceeds are not sufficient to meet the market demand — and growing external debt payments and soaring imports. This is putting pressure on the rupee.

There is also ambiguity over the financial support from Saudi Arabia, UAE and China. The political temperature was also rising following the former Prime Minister Imran Khan's announcement that he would march with his supporters to Islamabad after May 20 to demand new elections.

Since the beginning of this fiscal year (July 1, 2021) to date, the rupee has collectively dropped by a massive 19.75% (or Rs31.12) compared to the previous fiscal year’s close at Rs157.54. 

The rupee has maintained a downward trend for the last 13 months. It has lost 23.89% (or Rs36.39) to date, compared to the record high of Rs152.27 recorded in May 2021.