Pakistani rupee declines to new historic low of Rs299 per US dollar

The Pakistani rupee continued its downward trend on Tuesday, closing at an all-time low of Rs299.0070 against the US dollar. This represents a decline of 0.63 per cent or Rs1.873.

Interbank Closing
PKR Nosedives to All-time Low!
The Pakistani Rupee lost PKR 1.8732(0.63%) against the US Dollar on DoD basis ending the session at PKR 299.0070/US$.#Pakistan #Forex #ExchangeRate #Dollar #Rupee #Currency pic.twitter.com/qjqxMuKXMx

— Capital Stake (@CapitalStake) August 22, 2023

On Monday, the rupee continued to struggle against the US dollar, closing at Rs297.13. This drop in value is due to several reasons. One is the country’s current account deficit, which has widened because it’s now easier to open letters of credit. This change has affected the availability of foreign exchange, putting pressure on the rupee’s value in the local market.

Another factor is the lack of foreign exchange coming into the country. This shortage has also contributed to the rupee’s decline.

Experts say that the increase in import payments is tied to the International Monetary Fund’s (IMF) demand to remove import restrictions. This has led to a higher demand for the US dollar.

Political uncertainty is also playing a role in the rupee’s decline. There are concerns that the general elections might be delayed. This delay could also mean a hold-up in fulfilling promises made to the IMF and other international lenders. With a caretaker government in place, questions arise about who will invest in and lend money to the country.

To add to these challenges, there’s a need to bridge the gap between the rates in the inter-bank and open markets, which has been getting wider lately.