KARACHI: The Pakistani rupee lost further ground against the US dollar and was traded above 210 in the inter-bank during intra-day trading on Monday, as uncertainty around the International Monetary Fund’s (IMF) bailout programme and falling foreign exchange reserves take their toll.
The rupee was being traded at 210.19 on Monday morning, registering a depreciation of Rs1.44 against the greenback at the inter-bank.
On Friday, the rupee had closed at 208.75 against the US dollar due to panic over the IMF $6 billion Extended Fund Facility (EFF) and the fall in foreign exchange reserves held by the State Bank of Pakistan.
Last week, the rupee endured a 3.1% fall over the course of five sessions in the inter-bank market.
During the course of the week, increased uncertainty over the EFF was witnessed as reports indicated that the lender was displeased with the Pakistan budget, driving sentiments that the IMF programme may get detracted.
Meanwhile, foreign exchange reserves held by the State Bank of Pakistan (SBP) fell under $9 billion, which added to the woes of the local currency.
“The major issue is uncertainty pertaining to the revival of the IMF programme, which is leading to the local currency devaluation,” Abdullah Umer, an analyst at Ismail Iqbal Securities said.
The analyst said there are reports regarding a shortage of dollars in the inter-bank, which has added to the pressure on the rupee. He also said that a slowdown in remittance flows is expected in coming days, amid a resumption of travel, which may further dent the forex reserves position and in the process the local currency as well.
On the other hand, the Pakistani business community has urged the central bank to control the continuous nosedive of the Pakistani rupee against the US dollar.
Vice President of Pakistan Businesses Forum (PBF) Ahmad Jawad recently said the devaluation of the rupee during the PTI government in the name of a “market-determined” exchange rate was a blunder, and now the PML-N government is continuing the same mistake.
He said Pakistan cannot afford a “dollarised” economy and the government should control dollar flights without any further delay.
“Dollarisation is a situation when the local currency loses its stability as a medium of exchange due to hyperinflation or instability and the same is happening in Pakistan,” he said.