During intraday trading today, the Pakistani Rupee (PKR) fell below the 242 mark against the US Dollar (USD) as pressure from political unpredictability continued to build on currency markets.
By noon, the local currency had depreciated by Rs. 4.51 in relation to the US dollar and was selling for Rs. 242.26 on the open market. This is the third-largest intraday decrease in more than three years and the second-largest intraday drop in a week. The dollar has increased in value (intraday) against the PKR by Rs. 59.06 since April 11.
The International Monetary Fund’s (IMF) program’s delayed reactivation, the financing shortfall, and the incumbent government’s humiliating loss in the Punjab elections are just a few of the factors putting pressure on the rupee. Market participants contend that Pakistan’s economy is constantly at danger from political instability. An enormous current-account deficit, soaring inflation, and worries over Pakistan’s finance requirements are all adding to the pressure on the local currency.
According to the State Bank of Pakistan, the South Asian country’s current account recorded a substantial deficit of $17.4 billion for the fiscal year 2021–22 (FY22), compared to the $2.82 billion reported during the fiscal year 2020–21 (FY21) (SBP).
Despite increased exports and remittances, CAD increased to $2.3 billion in June due to a jump in oil imports. Oil imports have been significantly lower so far in July, and the gap is anticipated to start declining again soon. Overall, the current account deficit has sharply increased as a result of the rupee’s decline versus the dollar.