Pakistani rupee slides to new all-time low amid political, economic uncertainty

A foreign currency dealer counts US dollar bills at a shop in Karachi, Pakistan, on February 25, 2022. (AFP/File)

• Outflow of $352 million invested in treasury bills, Investment Bonds exerting pressure on rupee, analysts say
• Pakistan equity market closes bullish on hopes of political settlement on no-confidence motion against PM Khan

KARACHI: Pakistan’s national currency dropped to another historic low of Rs182.19 against the US dollar, currency traders and analysts said on Monday, as uncertain political and economic situation continues to exert pressure on the rupee. 
The national currency depreciated by 0.23 percent during Monday’s trading session in the interbank market, according to the data released by the State Bank of Pakistan. The dollar closed at Rs181.78 on Friday. 
“Domestic politics, economic situation and global commodity prices are putting pressure on the Pakistani rupee,” Samiullah Tariq, research director at the Pakistan-Kuwait Investment Company, told Arab News. 
Political uncertainty has been on the rise in Pakistan as Prime Minister Imran Khan faces a no-confidence vote in parliament. Pakistan’s trade deficit has widened by 82.18 percent to $31.9 billion in the current fiscal year from July-2021 till February 2022, amid rising imports which have also increased the demand for dollar. 
The outflow of foreign currency worth $352 million to safe havens after the Russian invasion of Ukraine has also played a role in the depreciation of rupee. 
“The demand for dollar is rising for import payments due to higher commodity prices in the international market,” Tariq said. 
“As per the central bank data, foreign investors have sold $352 million worth of treasury bills and Pakistan Investment Bonds (PIBs) during the month of March so far, which is the highest monthly selling after April 2020 when bonds worth $601 million were sold.” 
Currency dealers said the country’s dwindling foreign exchange reserves were also playing a crucial role in the strengthening of greenback against the rupee. 
“The declining forex reserves are also exerting pressure on the rupee, amid increasing imports which have doubled as compared to the last year,” Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan (ECAP), told Arab News. 
During the week ending on March 18, Pakistan’s foreign exchange reserves decreased by $869 million to $14.96 billion due to external debt and other payments, according to a central bank statement issued on Thursday. 
Paracha said the currency trading, particularly the trade of dollar, has declined by as much as $3 million per day from around $15 million in the open market, where the greenback was trading at Rs183 on Monday. 
“Dollar has become more expensive and even those who remit dollars for education or treatment abroad are reluctant to buy,” Paracha said. “Political uncertainty is also compounding the situation.” 
On the other hand, the country’s stock market remained bullish on hopes of a political settlement through parliament. 
“Stocks closed higher amid speculations ahead of the National Assembly session to decide on the no-confidence motion,” said Ahsan Mehanti, chief executive officer (CEO) of the Arif Habib Corporation. 
“Institutional support on a likely accord with the International Monetary Fund (IMF) after the 7th review under the Extended Fund Facility (EFF) and a slump in global crude oil prices played a catalyst role in the bullish close.” 
Pakistan’s stock market closed 382 points higher at 43,933-point level, according to the data posted on the Pakistan Stock Exchange website.