KARACHI: The Pakistani rupee fell Rs2.77 against the dollar on Tuesday, reaching an all-time low of Rs202.83. This happened as rumours about the upcoming budget and the government’s decision to freeze foreign currency accounts grew.
On Monday, the local currency was worth Rs 200.06 per dollar. On Tuesday, it was worth Rs202.83 per dollar, which is a drop of Rs2.77. On May 26, 2022, the rupee hit its all-time low of Rs202.01.
The dealers said that the rupee fell to an all-time low because of rumours that the government was thinking about freezing foreign currency accounts. Uncertainty about the budget has also put pressure on the local unit.
The budget will be presented on June 10, and the International Monetary Fund (IMF) will think about restarting its loan programme if Pakistan follows through on the things it said it would do in the budget.
Also, the local unit stayed under a lot of pressure as the country paid for oil imports.
Pakistan’s falling foreign exchange reserves are also a big threat to the country’s economic stability. These reserves are running out of money more quickly than they used to.
The foreign currency reserves held by the State Bank of Pakistan (SBP) went down by $366 million during the week ending May 27. They were $10.08 billion on May 20 and dropped to $9.72 billion during the week ending May 27.
The country had $15.77 billion in liquid foreign currency reserves, which included the net reserves held by banks other than the SBP. The net reserves held by banks were worth $6.04 billion.
In another case, on June 2, the global rating agency Moody’s changed Pakistan’s outlook from stable to negative, citing the country’s “increased external vulnerability” and uncertainty about how it will get the money it needs from abroad.
The local unit is also in danger because the current account deficit is getting worse. Pakistan’s trade deficit grew quickly to $3.64 billion in March 2022, up 12 percent from the same month in the previous fiscal year.
In the first nine months of the current fiscal year, from July to March, the trade deficit grew from $20.8 billion to $35.52 billion. In the same nine months of the previous fiscal year, the trade deficit was only $20.8 billion.
Since the beginning of this fiscal year, the local currency has been under pressure. From Rs157.54 per dollar on June 30, 2021, to its current value of Rs202.83, the rupee has lost Rs45.29, or 28.74%.
At 4:00 p.m. PST, people bought and sold dollars on the open market for Rs. 202 and Rs. 204.