Pakistan's rupee dropped to a new historic low against the US dollar, closing over the 176 level for the first time in the inter-bank market on Monday.
As per the State Bank of Pakistan (SBP), the PKR finished at 176.20 against the USD after a day-on-day depreciation of 74 paisas or 0.42%. On Friday, the rupee had closed at 175.46 against the dollar in the inter-bank market.
This is the weakest closing level for the rupee against the dollar, beating the 175.73 it hit on November 12, 2021.
The fall comes as the market awaits inflows from international lenders including the International Monetary Fund (IMF), and the fall in foreign exchange reserves held by the SBP.
“The materialisation of inflows would consolidate the currency,” Tahir Abbas, Head of Research at Arif Habib Limited, told Business Recorder.
Earlier, the IMF and Pakistani authorities reached a staff-level agreement for the resumption of the Extended Fund Facility (EFF), under which Pakistan will receive over $1 billion in funding.
However, there has been uncertainty on its timeline, and the additional steps Pakistan needs to take to secure the funding.
Against USD: Pakistan's rupee ends near historic low
“Furthermore, the $4.2 billion Saudi Arabia funding facility for Pakistan remains pending,” added Abbas.
He said that the market remains concerned over the upcoming trade figures. “The upcoming import figures for November are expected to be the highest ever, amounting to $7 billion. However, the expected export figures would also be the highest."
He added that the current account deficit is projected to be $1.5 billion or above for November.
Pakistan’s current account deficit widened to $1.66 billion in October 2021 from a surplus of $448 million recorded in the same month last year. On a monthly basis, the deficit widened 46% as compared to $1.13 billion recorded in the previous month (September 2021).
This article was first published in Business Recorder on Nov 29, 2021.