In the interbank market on Monday, the rupee fell to a new all-time low of Rs174.43 versus the US dollar, owing to rising pressure on import payments and impending uncertainty about the International Monetary Fund’s decision on the renewal of the $6 billion Extended Fund Facility (EFF).
For the previous five months, the rupee has been on a downward trend. It has dropped 14.55 percent (or Rs22.16) after reaching a 22-month high of Rs152.27 in May.The rupee has depreciated 10.72 percent (or Rs16.89) since the start of the current fiscal year on July 1, 2021, according to statistics issued by the central bank.
“If the IMF-Pakistan discussions fail, the rupee would stay under pressure,” currency dealers predict, as they believe the huge depreciation of the rupee against the dollar was also driven by panic buying and ahead booking by importers due to worries of a likely failure of the IMF-Pakistan talks.
Traders also attributed the dollar’s strength versus the rupee to greater imports and rising commodity costs in overseas markets.
Apart from importers’ desire for dollars, panic selling and forward booking of the greenback are also adding to the rupee’s decline versus the dollar.
there is a lot of uncertainty right now because of the energy crisis and the high cost of LNG and oil imports.
“It’s difficult to predict when the currency will consolidate,” the expert said, adding that the IMF’s decision-making process is also putting pressure on the currency.
Other foreign financial institutions will join the IMF programme as soon as it begins, according to Schehzad, and “this is necessary to enhance liquidity.”
He went on to say that the reopening of the IMF programme will offer the market psychological support.
International crude oil prices are hovering around $85 per barrel, making fuel imports for domestic use more expensive.
