On Tuesday, during intraday trade, the Pakistani Rupee (PKR) crashed below the 221 level against the US Dollar (USD). By midday, the local unit had lost over Rs. 5.81 against the greenback and was trading at Rs. 222.11 in the open market. This is the highest intraday decrease in over three years. Since 11 April, the US Dollar is up by Rs. 38.04 against the PKR.
Imran Khan’s Success in Sunday’s Polls Has Worsened Pakistani Rupee Against US Dollar
The Pakistani Rupee is taking a loss during intra-day trading today as reviewers suggest former Prime Minister Imran Khan’s success in Sunday’s polls worsened the local unit’s decline against the US dollar.
CEO of Alpha Beta Core Securities, Khurram Shehzad stated, “On the dollar rate today, Heard two banks have some payments to make, so they are trying to get the US$ from the SBP while SBP is not releasing dollars, so these banks are accumulating it from the market. And heard these payments are not that big either. This means the dollar rate may not sustain at these high levels.”
On Monday, the Pakistani rupee dropped by 1.97 percent against the US dollar and closed at Rs. 215.20 after losing Rs. 4.24 in the interbank market, the highest single-day drop since 26 March 2020. According to Fitch Ratings, renewed political uncertainty in Pakistan cannot be excluded and could undermine the authorities’ fiscal and external adjustment, as ensued in early 2022 and 2018, specifically in the current conditions of slowing growth and high inflation.
SBP Has Been Using Forex Reserves to Slow Currency Devaluation
Fitch Ratings further stated that limited external funding and large current account deficits (CADs) have depleted foreign exchange (FX) reserves, as the State Bank of Pakistan (SBP) has utilized reserves to slow currency devaluation. Liquid net FX reserves at the SBP plunged to about $10 billion or just over one month of current external payments by June 2022, down from about $16 billion a year earlier.