Rupee's downward spiral continues unabated, closes at 201.92 against US dollar

• Rupee drops to a historic low of Rs201.92 against US dollar.
• Ongoing political crisis rocks confidence in the currency.
• Speculations regarding IMF dents investors' sentiment.

KARACHI: The Pakistani rupee dropped to a historic low of Rs201.92 against the US dollar on Wednesday as an ongoing political crisis rocked confidence in the currency.

According to data released by the State Bank of Pakistan (SBP) the local currency shed 0.25% against the greenback today.

The rupee has been declining for months, but the fall became precipitous in March when the then opposition parties tabled a no-confidence motion against Imran Khan that led to his ouster.

The ongoing political drama in the wake of PTI’s ‘Azadi March’ added fuel to the freefall of the local currency.

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Meanwhile, speculations regarding the outcome of the talks with the International Monetary Fund (IMF) further dented investors' sentiment.

With regards to negotiations with the IMF on the seventh review, the acting governor Dr Murtaza Syed told a virtual post-monetary policy analyst briefing that the negotiations are underway and it will take some time as they are doing a parallel -run on next year’s budgetary measures.

“There are chances of delay in the IMF outcome,” Arif Habib Limited Head of Research Tahir Abbas told Geo.tv. “The rupee will continue to decline until some positive news comes from the IMF front,” he added.

The analyst further added that the political upheaval was also contributing to the devaluation of the local currency.

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Since the beginning of this fiscal year (July 1, 2021) to date, the rupee has collectively dropped by a massive 28.17% (or Rs44.38) 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 32.60% (or Rs49.65) to date, compared to the record high of Rs152.27 recorded in May 2021.