Pakistani Rupee May Fall Further to PKR 275 Per US Dollar

The Pakistani rupee may fall even more to 275 per dollar, according to IGI Securities Ltd., one of the country's top securities firms, according to media reports. Pakistan is already facing an economic nightmare.

During intraday trade, the rupee was trading at Rs 238 to the US dollar in the interbank market.

This year, the value of the Pakistani Rupee has fallen by 23%. According to statistics from the American multinational investment bank JPMorgan Chase & Co., investors demanded an additional yield of more than 1,700 basis points to hold Pakistan's sovereign debt over US Treasury bonds.

In FY22, the current account deficit (CAD) increased significantly to USD 17.4 billion.

Furthermore, Toyota and Suzuki, two of Pakistan's top automakers, intend to shut down portions of their plants next month as a result of a lack of raw materials caused by import restrictions and fluctuating currency exchange rates.

On Thursday, the Pakistani rupee hit a record low against the US dollar, falling to PKR 240.5 in the interbank market.

By 12:03 PM, the Pakistani rupee had dropped 4.48, or 1.89 percent, from its previous closing of 236.02, according to the Dawn newspaper, which cited the Pakistan Forex Association (FAP).

The general secretary of the Pakistani Exchange Companies Association, Zafar Paracha, attributed the ongoing depreciation of the rupee to the political climate and the lack of action by the government.

"The political climate in the country is dire, yet the administration and political parties don't seem bothered. They are solely interested in preserving their government, according to Paracha.

The prolonged political crisis continued to cause jitters on the financial markets.

According to the Foreign Exchange Association of Pakistan, the rupee has lost approximately 30% of its value since the year 2022 began.

Miftah Ismail, the minister of finance and revenue for Pakistan, voiced optimism on Wednesday that the pressure on the rupee would subside in a few weeks. "Starting in the following month, Pakistan will receive more cash through exports and remittances than it does through imports and debt service. As a result, the rupee would no longer be under pressure and would rise, according to Ismail.

The rise in interest rates, global inflation, supply chain disruptions, and the US dollar reaching historic highs, among other factors, he claimed, have all contributed to the devaluation of the rupee.

The IMF and Pakistani authorities came to an agreement at the staff level earlier this month for the conclusion of the combined seventh and eighth reviews of the Extended Fund Facility (EFF).

Despite the agreement, investors are concerned due to the country's continuous political and economic unrest, according to Pakistan's Business Recorder.

The decline in the value of the Pakistani rupee coincides with predictions made by Moody's Investors Service and Fitch Ratings that Pakistan will get a USD 1.2 billion bailout from the International Monetary Fund (IMF).

It is anticipated that the strain on the nation's currency and foreign reserve will reduce once the agreement amount is secured.

According to Krisjanis Krustins, a Hong Kong-based director at Fitch, "we presume IMF board approval of Pakistan's new staff-level agreement with the lender," Bloomberg quoted him as saying on Wednesday. This will open up a lot more funding from the IMF and other multilateral and bilateral sources, and it might provide the markets a big confidence boost. (ANI)

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