KARACHI: Pakistan’s national currency on Friday closed the weekend trading session at a historic low of Rs184.09 against the US dollar, traders and analysts said, amid political turmoil, high global commodity prices and depleting foreign exchange reserves.
Pakistan’s prime minister, Imran Khan, is facing mounting pressure from his political rivals to step down after the opposition alliance tabled a no-confidence motion against him in the country’s parliament late last month.
Khan, who is facing tough opposition and has been abandoned by his coalition partners, remains defiant and has refused to resign. The crucial vote is expected to take place on Sunday.
The Pakistani currency has lost its value by 4.2 percent or Rs7.6 against the greenback since January, while it has depreciated by more than 16.6 percent or Rs26.22 during this fiscal year, according to the Pakistani central bank's data.
“Pakistan is at the crossroads experiencing deep-rooted political challenges due to no-confidence motion and external shocks amid high oil prices, increased economic vulnerability and flared risks for political and economic stability,” Adil Jilani, the head of Trust Securities and Brokerage's economic division, told Arab News.
“This has deteriorated external account and Pakistani rupee that hit an all-time low to Rs184.09 against US dollar, dropping by 3.77 percent since March 1.”
The current political turmoil has only spurred the pace of the Pakistani currency’s losing streak, which was already battling high import bills, mainly due to rising global commodities and declining foreign exchange reserves.
Analysts said the depreciation of rupee was resulting in higher inflation in the country.
“The rising dollar continues to contribute to the inflationary buildup in Pakistan,” said Abdul Azeem, the research head at the Spectrum Securities brokerage house.
Inflation in Pakistan increased by 12.7 percent on a year-on-year basis in March as compared to an increase of 12.2 percent in February. On a month-on-month basis, it increased by 0.8 percent in March, compared to a rise of 1.2 percent in February, according to the data released by the Pakistan Bureau of Statistics on Friday.
Analysts believe the Pakistani currency will remain under pressure, primarily due to the external balance-of-payment situation.
“The rupee will remain under pressure due to current external payment situation and expanding current account deficit, as the country is facing inflow issues amid declining forex reserves,” Azeem said.
Pakistan’s foreign currency reserves have declined by $2.91 billion to $12 billion due to repayment of external debts, including a major syndicated loan facility from China, according to the Pakistani central bank, which says the rollover of the syndicated facility was being processed.
