The rupee continued to lose ground against the US dollar as it depreciated to a historic low of Rs180.07 in the inter-bank market on Thursday.
According to the State Bank of Pakistan (SBP), the Pakistani rupee had closed at Rs179.44 against the greenback on Wednesday.
A report of Arif Habib Limited stated that the rupee declined 0.35% day-on-day and has lost 12.51% since the beginning of current fiscal year on July 1, 2021.
Speaking to The Express Tribune, Arif Habib Commodities CEO and Managing Director Ahsan Mehanti stated that the rupee touched a new low because of high speculation in the foreign exchange market during the day.
“Moreover, Washington DC’s District Court revoked the stay order in the Reko Diq case and now the country is liable to pay a lofty amount of $6 billion in penalty,” he said.
“This outcome was not expected by the market, which now projects that the rupee will weaken further.”
In addition, the trade deficit in February 2022 widened to unsustainable levels, which drove down the currency.
A persistent uptrend in imports does not bode well for the country, especially when exports are unable to match the pace. This is another reason why the rupee is receiving a hammering, Mehanti said.
“Crude oil prices soared to multi-year highs a few days ago and the market expects the rupee to bear the brunt of the development after the government froze prices of petroleum products,” he added.
“The rupee is under pressure and is expected to fall further because the country has to pay for surging imports.”
Moreover, the market believes that Prime Minister Imran Khan’s subsidy on fuel prices would act as a hurdle in the way of seventh review of Pakistan’s economy by the International Monetary Fund.
Published in The Express Tribune, March 18th, 2022.