KARACHI: In the first trading session after the budget 2022-23, the Pakistani rupee continues to fall and again surpassed the 203-mark by losing 65 paise in the interbank during intraday trade on Monday.
Earlier, in view of the high dollar demand for import payments ahead of fiscal year-end, traders had said that the local currency was expected to remain on the back foot in the current week.
The local currency was volatile, having swung between 200.06 to a new record low of 202.83 per dollar during the outgoing week. It closed at 202.35 to the dollar on Friday.
The rupee dived as a relentless surge in global crude oil prices raised concerns about a sustained rise in imported inflation and widening current account deficit, while fast-depleting foreign exchange reserves were also hurt.
“The local unit is likely to remain volatile in [the] coming sessions owing to persistent high dollar demand for import payments. This volatility can be explained by fiscal year-end position adjustment by banks and corporates,” said a forex trader.
“We expect the rupee to weaken further in [the] days ahead,” he added.
“The decline in remittance inflows is also not a good development for the currency as it aggregates pressure on the external account.”
The remittances dropped by 25.4% month-on-month to $2.3 billion in May.
The country is facing a balance of payments crisis with the central bank’s foreign exchange reserves falling to $9.2 billion, enough to cover 1.35 months of import payments, as well as double-digit inflation.
“The measures announced in the fiscal year 2022/23 will set the direction of the rupee as the market is looking at how the government will implement fiscal consolidation steps unveiled in the finance minister’s budget speech to resume the stalled $6 billion International Monetary Fund (IMF) programme,” said another trader.
More to follow …
