Rupee slumps to record low, crosses 290 amid heightened political tension

Ongoing political instability took its toll on market sentiment as the Pakistani rupee finished at a record low of 290.22 against the US dollar after depreciating nearly 1.9% in the inter-bank market on Wednesday.

As per the State Bank of Pakistan (SBP), the currency closed at 290.22, a decrease of Rs5.38.

The rupee had also sustained losses against the US dollar on Tuesday, settling at 284.84 in the inter-bank market.

Experts said the depreciation comes on account of a rise in uncertainty over resumption of the International Monetary Fund (IMF) bailout programme amid heightened political tension.

“Political volatility has exacerbated uncertainty in the market regarding the IMF programme,” Samiullah Tariq, Head of Research at Pak-Kuwait Investment Company, told Business Recorder.

The remarks come after the National Accountability Bureau (NAB), on Tuesday, arrested the Pakistan Tehreek-e-Insaf (PTI) Chairman and ex-premier Imran Khan through Rangers personnel in the Al-Qadir Trust case, which led to massive protests across the country.

In a key development, the Finance Ministry said on Tuesday arrangements had been made to repay or roll over this fiscal year’s $3.7 billion debt.

“This should not be any cause of concern as arrangements have been made for the rollover/repayment of this debt,” the ministry said in a statement.

Pakistan’s economy has been in turmoil for months due to an acute balance of payment crisis, with its central bank reserves falling to cover just a month of controlled imports. There have been concerns the South Asian country could face a default on its external payment obligations, especially if it fails to resume the IMF deal, which it has been trying to negotiate since February.

Internationally, the US dollar weakened broadly on Wednesday after US President Joe Biden and top lawmakers failed to break a deadlock on the debt ceiling crisis, though currency moves were marginal amid caution ahead of US inflation data later in the day.

Biden and House of Representatives Speaker Kevin McCarthy remained divided over raising the $31.4 trillion US debt limit following talks on Tuesday, with just weeks to go before the United States may be forced into an unprecedented default.

Against a basket of currencies, the US dollar index was last 0.07% lower at 101.55.

Oil prices, a key currency indicator, dipped on Wednesday, stalling a three-day rally, as an unexpected rise in US oil inventories sparked demand concerns, while investors awaited US inflation data to gauge the next rate decision in the top oil consuming nation.

Inter-bank market rates for dollar on Wednesday

BID Rs 290.25

OFFER Rs 292.25

Open-market movement

In the open market, the PKR lost 7 rupees for both buying and selling against USD, closing at 294 and 297, respectively.

Against Euro, the PKR lost 3 rupees for both buying and selling, closing at 317 and 320 respectively.

Against UAE Dirham, the PKR lost 2 rupees for buying and 2 rupees 5 paisa for selling, closing at 80.50 and 81.30, respectively.

Against Saudi Riyal, the PKR lost 1 rupee 25 paisa for both buying and selling, closing at 77.75 and 78.50, respectively.

Open-market rates for dollar on Wednesday

BID Rs 294

OFFER Rs 297