Downward trend is expected to continue in coming days.
The Pakistani rupee hit all-time low against the US dollar by plunging to Rs157 (42.70 against the UAE dirham) in the inter-bank market on Friday due to rising debt payments and dwindling foreign exchange reserves.
The greenback was being traded at about Rs156.50 in the open market. In the last five working days, the rupee has lost Rs7.70 against the dollar and the downward trend is expected to continue in coming days.
In a statement on Thursday, the State Bank of Pakistan (SBP) – the central bank — reported that its foreign exchange reserves dropped by $55 million to $7,807.2 million due to payments on account of external debt servicing.
Muzzammil Aslam, senior economist and former CEO of EFG-Hermes Pakistan, said extended Eid holidays has complied huge import bill backlog and rough estimate suggests over $1 bilion was in queue for clearance, while the remittance flows tapered off post-Eid period.
“The mismatch between the exports and imports dues coupled with absence of SBP intervention has weaken the rupee against the US dollar. The adjustment is trade related not due to dollarization,” Aslam told Khaleej Times.
“As we witnessed in May exchange rate moved both sides, we expect similar trend from now,” he added.
Analysts and experts said that the rupee is rupee is expected to stabilize at Rs160-165 (43.6-45.2 versus dirham) against the US dollar by the end of this month. Citing the International Monetary Fund (IMF)’s conditions for a $6 billion package announced last month, they said the central bank has refrained to intervene in the market to rescue the rupee.
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