On Tuesday, the rupee experienced a significant decline against the US dollar, falling by Rs4 in the open market. This dip is attributed to political uncertainty and decreasing exports and remittances. The rupee’s value settled at Rs300 in the open market, while in the interbank market, it dropped by Rs3.02, concluding at Rs291.51 against the dollar.
Factors Behind the Fall
Zafar Paracha, General Secretary of the Exchange Companies Association of Pakistan (ECAP), commented on the situation, stating that the rupee’s drop was anticipated following the transitional government’s assumption of power. Paracha believes the interim government will likely implement measures that align with the International Monetary Fund (IMF) stipulations, which the previous government had hesitated to embrace.
One such step, removing import restrictions to fulfil IMF prerequisites, is viewed as contributing to the rupee’s devaluation. Additionally, Paracha highlighted a reduction in remittances from overseas Pakistani workers, which stood at $2 billion for the first month of this fiscal year, and a decrease in exports as critical factors in the rupee’s depreciation.
Further deterioration of the rupee’s value against the US dollar is anticipated, aiming to bridge the difference between open and interbank markets, adhering to the IMF’s guidelines. Paracha also pinpointed a grey market and escalating terror incidents within the country as reasons for the dollar’s surge against the rupee.
