The dollar continues to gain ground versus the rupee, approaching a historic high.
The Pakistani rupee lost ground for the 15th straight session on Thursday, as the US dollar approached a historic high.
The rupee slipped to 239.75 after losing 0.10 against the previous session’s closing of 239.65 in intraday activity in the interbank market.The currency is now only Rs0.19 away from reaching an all-time low of Rs239.94 on July 28, 2022.
The rupee, which has been one of the worst performing currencies in emerging economies, has fallen about 9% this month due to a variety of issues.
According to Yousuf Rahman of KASB Securities, one of the causes for the rupee’s depreciation is debt payment, as total financing needs for the year are forecast at $32 billion.
Floods, according to Rahman, have prompted the government to buy vegetables, cereals, and cotton to replace damaged harvests, putting additional pressure on the rupee.
“This has put additional pressure on the import bill, and there have been reports of regular dollar outflows from grey channels, particularly over the Afghanistan border,” Rahman said.
He believes that the fundamentals and attitudes for the battered rupee would not improve until expected inflows from friendly countries occur.
“Once extra money is obtained from the World Bank, ADB [Asian Development Bank], and allied countries,” Rahman noted, “the rupee may stabilise around the 215 mark.”
The renewal of the International Monetary Fund (IMF) bailout programme, as well as the disbursement of a $1.1 billion loan tranche from the Fund last month, temporarily bolstered the rupee in late August. However, the currency is now again in trouble.
“Dollar strength and rising commodity prices are weighing on regional and major currencies,” said Tresmark’s head of research, Komal Mansoor.
“This week, the Indian rupee traded above 80 per dollar, and the country has spent $90 billion to safeguard an already stable currency.” “The yuan, euro, and sterling have all fallen to multi-year lows,” Mansoor explained.
However, the local currency’s new lows are concerning for the economy since they demonstrate the government’s incapacity to stabilise FX reserves and counteract negative sentiment, he noted.”A two-way direction is critical for the currency.”
