The Pakistani rupee Wednesday plummeted to an all-time low of Rs240 against the US dollar in the inter-bank market as high oil prices and a bullish US Federal Reserve kept the currency under pressure.
The rupee’s freefall has continued for 14 consecutive working days. On Tuesday, the local currency closed at Rs238.91.
In the last 14 days, the rupee has lost around Rs25.40 (or around 12%).
On July 28, the Pakistani rupee hit its previous low of Rs239.94.
The rupee fell to an all-time low against the dollar on Tuesday after a drop in global oil prices triggered selling in the Indian currency.
A rising markets expert said that the rupee’s drop was caused by delayed investments from Gulf Cooperation Council (GCC) nations.
In August 2022, the local currency won the title of the best-performing currency in emerging markets. On the other hand, in August 2021, the local currency was the worst-performing currency in emerging markets.
The analyst said that the IMF loan of $1.16 billion also helped to stabilise the currency.
The weakening of the rupee is primarily due to the dollar gaining in strength against world currencies as the Fed is expected to hike interest rates in the US monetary policy next month, experts said.
Textile exporters are fearing losing orders amid high inflation in the west, besides, losses incurred by the devastating floods increased the demand for the greenback to import agricultural products including cotton.
In line with this, the Pakistani rupee may continue to decline against the US dollar.
The rise of friendly nations
Saudi Arabia, the United Arab Emirates (UAE), and Qatar have pledged to invest $6.2 billion in Pakistan over the next year, but Islamabad has not yet provided a detailed plan for the infusion of capital.
In addition, Saudi Arabia deposited $3 billion in Pakistan’s State Bank (SB) for one year. This is separate from the $6.2 billion investment pledged by the GCC economies.
The vague announcement said the kingdom has yet to announce a plan as to how and when it will supply oil on deferred payments worth $1.2 billion over a period of 12 months, part of the GCC investment programme.
