New Delhi: The Pakistani rupee depreciated to a record low of 298 against the US dollar amid political turmoil in the country following the arrest of senior Pakistan Tehreek-e-Insaf (PTI) leaders, including Imran Khan. It has been said in media reports.
Geo News reported that the local unit depreciated by Rs 8.78, or 3.02 per cent, against the dollar on Thursday and was trading at 299 at the interbank market. Dollar bonds due 2031 fell on Thursday to their lowest since November and were quoted at 33.10 cents on the dollar. Geo News reported that the new rate is just Re 1 away from the much-anticipated rate of Rs 300 per dollar.
The rupee’s depreciation has piled up foreign debt without taking on new external debt, making imports more expensive for Pakistan, which faces a six-decade high inflation reading at 36.4 percent in April 2023. Financial pundits believe that the rupee is depreciating due to political reasons. and social unrest following the arrest of PTI chairman Imran Khan, Geo News reported.
Besides, the demand-supply gap for the dollar has also widened as exporters stopped selling the American currency on speculation that the rupee would depreciate further against the greenback. On the other hand, importers are seen rushing to buy dollars. This gap in the demand and supply of foreign exchange in the interbank market has contributed to the devaluation of the rupee.
Khaqan Najeeb, former advisor to the Ministry of Finance, said that continuing political instability has weighed on market sentiments, causing the Pakistani rupee to hit a record low.
“The increased political turmoil comes at a time when the economy has been in recession for months, largely due to an acute balance of payments crisis, a decline in State Bank of Pakistan’s reserves coupled with highly controlled imports,” he said. One month is barely being covered,” he said. ,