Rupee continues to slide, reaches another record low

KARACHI: Rupee reached a new record low on Wednesday, selling at 173.45 against the dollar in the interbank market to continue a slide that saw it lose more than 13.5 percent since May, dealers said.

They added that a growing current account deficit and uncertainty about Pakistan and International Monetary Fund (IMF)’s talks for resumption of Extended Fund Facility (EFF) kept rupee under pressure.

In interbank dollar’s buying rate was 173.30 and selling was recorded at Rs.173.45. Whereas in open market, dollar was available at Rs.173.50 for buying and for Rs.174.30 for selling, the daily report of Exchange Companies Association of Pakistan (ECAP) showed.

The government, vowed to seek a revival of the IMF’s Extended Fund Facility, so far failed to strike staff-level agreement facility. The IMF programme is widely seen as the way Pakistan can unlock foreign exchange liquidity and multilateral financing, and gain in terms of the Financial Action Task Force.

Shaukat Tarin, advisor to the Prime Minister on finance along with his team is in Washington since October 4 to negotiate with the Fund for the release of the $1 billion loan tranche.

Pakistani finance managers are expected to prolong their stay in Washington for a couple of more days for making last-ditch efforts, to reconcile and evolve consensus on the Memorandum of Economic and Financial Policies and completion of 6th and 7th reviews.

Zafar Paracha, general secretary ECAP said prolonged delay to reach at an agreement for resumption of EFF between Pakistan and IMF is contributing mainly in the depreciation of rupee.

“Though CA deficit is widening, however other fundamentals of economy like remittances, exports etc. are strong, and they supported the rupees against the greenback,” he added.

Analysts see the outlook for the rupee weaker in the near-term as there is an all-round demand coming in from oil and manufacturing importers due to acceleration in the economic recovery and the concessionary lending scheme like temporary economic refinance scheme from the State Bank of Pakistan to foster investment activities even in the tough times of the Covid-19.

Khurram Schehzad, chief Executive Officer of Alpha Beta Core giving a comparison of the dollar- rupee parity with the other regional currencies said that Pakistani

rupee shed 11 percent of its value against the dollar in the last six months whereas, the other currencies in the region depreciated hardly one to two percent against the greenback.

He pointed out that Indian rupee against US dollar shed 1.8 percent by trading at 75.1 Indian rupee on October 19, 2021 compared to 73.8 Indian rupee on 1st May 2021.

Whereas, Bangladeshi Takka which was trading at 84.7 against a US dollar on May 01, 2021 is now available for 85.6, showing a depreciation of just 1.1 percent.