As currency pressure increases, the rupee’s wild decline versus the dollar continues.
The Pakistani rupee’s wild decline against the US dollar resumed on Friday as a number of different reasons kept the local currency under pressure during intraday activity on the interbank market.
The rupee was trading at 220.44 against the dollar, down 1.03 from yesterday’s finish of 219.41, continuing its week-long weakening trend.
The rupee will continue to decline, according to analysts and experts, until the International Monetary Fund (IMF) distributes Pakistan’s $1.17 billion tranche during its executive board meeting on August 29.
Acting Governor of the State Bank of Pakistan, Murtaza Syed, stated in an interview with Bloomberg TV that Pakistan is likely to get the IMF tranche within six days of the Executive Board’s approval.
Once Pakistan receives the IMF loan, analysts believe the government would get more funding from multilateral and bilateral organisations, helping to replenish its dwindling foreign exchange reserves.
In addition to the IMF’s pressure, the government withdrew the months-long restriction on the import of luxury goods, and the speed of export growth has not kept up with expectations, which has put pressure on the rupee.
In addition, Pakistani travellers now have to disclose 5,000 dirhams at the airport upon arrival in the UAE, which has increased the cost of the US dollar on the open market.
Dr. Khaqan Hassan Najeeb, an economist and former consultant to the federal ministry of finance, claimed that recent political developments are partly to blame for the rupee’s decline, which is producing market anxiety in addition to the dollar’s global strengthening.
He added that the State Bank of Pakistan’s (SBP) declining foreign reserve holdings were another factor in the decline. With only $7.8 billion in reserves, there is barely enough money to cover a month’s worth of imports.
According to Arab News, Zafar Paracha, general-secretary of the Exchange Companies Association of Pakistan (ECAP), the local unit’s decline was caused, among other things, by its smuggling to Afghanistan, where sellers receive greater rates.
