Forex Association of Pakistan data showed that on Tuesday, for the first time in the history Pakistani rupee broke all records by surpassing 205 threshold against US dollar after shedding RS 4 in the open market. The graph kept on falling downwards dropping to an all-time low of Rs202.75 in the interbank market during full day trade on rising demand of green bank because of payments of imports. The local currency continued its decline as the demand for rupee is higher than supply due to import demand which has escalated because of oil payments.
The rupee had closed on Rs206.06 on Monday according to the State Bank of Pakistan. Limited Head of Research, Tahir Abbas has reported that due to pending oil payments and increasing oil prices the local currency is under pressure. The analyst said that the plunge came on the back of a mammoth import ill and widened the current amount deficit. He further added that market is keeping a close eye on the developments of International Monetary Fund (IMF) programme which will be revived after the announcement of the upcoming budget of year 2022-2023 as the government is trying to meet the conditions put forward by IMF.
Last time the rupee had broken this record of reaching 202 was on May 26, 2022, when it was uncertain that IMF would approve the loan or not and recent fall is due to high prices of petroleum as a result of removing subsidies. The budget is expected to be announced on June 10, 2022, with traders and investors expecting IMF conditions to dominate.
The local currency will remain under pressure due to increase in fiscal year-end dollar demand. The traders are not tempted by the China’s $207 billion deposit placement as they don’t find it useful for fiscal or external support.