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All-time low: Rupee closes at 200 in inter-bank trading for first time against US dollar

  • Investors concerned about government's inability to implement IMF conditions related to revival of stalled $6 billion EFF programme
Updated 19 May, 2022

The rupee's collapse continued for the eleventh consecutive session on Thursday, as the local currency plummeted to Rs200 for the first time in the country's history against the US dollar in the inter-bank market.

Investors have said that the government's inability to implement IMF conditions have raised concerns about the revival of the stalled $6 billion Extended Fund Facility (EFF) programme. Meanwhile, ongoing domestic political uncertainty further deteriorated sentiments in the market.

As per the State Bank of Pakistan (SBP), the currency closed at 200.00 after a day-on-day depreciation of Rs1.61 or 0.81%.

On Wednesday, the currency had closed at 198.39 after a day-on-day depreciation of Rs2.65 or 1.3%, as the rupee officially crossed the 200-barrier in the open market.

Currency's collapse continues: Rupee closes at 198.39 in inter-bank market, crosses 200 in open

“There is a room for reversal in terms of fundamentals, however it all depends on the result of the IMF talks and the government's commitment to implement measures,” Saad Hashmey, Executive Director at BMA Capital, told Business Recorder.

The analyst said that the cut-off yields decline in the latest treasury bill auction suggests that the government is not willing to borrow at such high interest rate.

Cut-off yields decreased by 5-29 bps in a T-Bill auction held on Wednesday. The cut-off yield of 3M T-Bill decreased by 29bps while the cutoff yield of 6M and 12M T-Bill decreased by 29bps and 5bps, respectively.

The market had offered Rs1,008 billion, out of which the government accepted bids amounting to Rs351 billion culminating in a realized value of Rs332 billion.

Meanwhile, Asad Rizvi, the former treasury head at Chase Manhattan, said that “pension cost, circular debt of Rs2.5 trillion, public entities [worth] Rs1.2 trillion and fiscal deficit of nearly 8% are not sustainable and are adding pressure”.

“Independent SBP is not worried about PKR plunge, probably waiting for IMF outcome,” Rizvi tweeted.

Talks between Pakistan and the IMF are underway at Doha, as the South Asian country seeks the revival of the IMF programme.

Govt seeks more SDRs from IMF to propel economy

Federal Minister for Finance and Revenue Miftah Ismail held a virtual meeting with IMF Mission Chief Nathan Porter on Wednesday.

During the meeting, Ismail reaffirmed the government’s commitment to undertake reforms envisaged under the IMF's programme and to complete its structural benchmarks. He said that the government understands it will have to take tough decisions while mitigating effects of inflation on the middle to low-income groups.

He emphasized that some of the issues that have adversely affected the economic situation were beyond the control of the government. These included exogenous factors - such as supply shocks, commodity super cycle and the Russia-Ukraine conflict - that were putting pressure on the current account as well as foreign exchange reserves.

Porter shared IMF’s assessment of the challenges facing the economy and said Pakistan’s economy demanded both immediate and long-term measures.

The government is currently seeking an extension to the IMF programme until June 2023 with an additional loan amount of $2 billion.

The revival of the programme is seen as crucial for cash-strapped Pakistan, which has seen its foreign exchange reserves plummet in recent weeks dropping to $10.31 billion last week, amid import payments and debt servicing.

Inter-bank market rates for dollar on Thursday

BID Rs 199.80

OFFER Rs 200.20

Open-market movement

In the open market, the PKR remained unchanged for buying while losing 50 paisas for selling against USD, closing at 199 and 201, respectively.

Against Euro, the PKR lost 2.50 rupees for both buying and selling, closing at 208.50 and 210.50, respectively.

Against UAE Dirham, the PKR lost 80 paisas for both buying and selling, closing at 54.80 and 55.30, respectively.

Against Saudi Riyal, the PKR lost 40 paisas for buying and 50 paisas for selling, closing at 52.80 and 53.30, respectively.

Open-market rates for dollar on Thursday

BID Rs 199

OFFER Rs 201


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