After falling by 0.39% (76 paisas) in the inter-bank markets, the Pakistani rupee fell to Rs192.53 against the USD on Friday. It continued its downward slide against the greenback for six consecutive working days.
The rupee briefly fell to an intra-day low of Rs193 but then partially recovered to close at Rs192.53.
After an increase of Rs 1.50, the dollar was purchased on the open market at Rs 194
Analysts believe that multiple factors, including the failure of the government to secure a loan, and the rollovers from China, UAE, and Saudi Arabia, proved to be a major problem for the country’s currency. The Pakistani rupee was also affected by the delay in IMF negotiations.
The local unit’s slide was exacerbated by a growing trade deficit, shrinking foreign exchange reserves, and delays in the release of the International Monetary Fund tranche. The rupee also suffered from political uncertainty.
Pakistan requires $10-12 billion in foreign currency flows immediately as the trade deficit was growing rapidly and will likely rise to $50 billion within the next two weeks.
Despite higher imports, the country’s trade deficit rose 65 percent to $39.3 Billion in just 10 months. The trade deficit grew 24 percent to $3.74 Billion in April.
According to dealers, panic buying of dollars by people without sellers was continuing to put pressure on the rupee’s curb market. Dealers added that this increased demand led to a shortage in the greenback on the market.
Talks with the IMF were stalled because of the fuel subsidy that was provided by the previous government.
The rise in the prices of commodities, including crude oil, was another factor that helped to jolt the local currency. This increased the trade deficit significantly.
The US central bank Fed announced that it would increase its benchmark interest rate by one percentage point in the coming months. This will hurt gold (in dollar value) in world markets.
He said that the rupee-dollar parity would still play an important role when determining the gold price in Pakistan.