Despite a narrowing in the current account deficit, the rupee fell to a new all-time low of Rs181.35 against the US dollar in the interbank market during intra-day activity on Monday.
Aside from demand and supply, feelings drive the movement of the local currency against the greenback.
The rupee finished at Rs180.57 on Friday, according to data supplied by the State Bank of Pakistan (SBP).
Furthermore, the currency was under pressure due to a potential political crisis and concerns regarding the next tranche of the International Monetary Fund (IMF) loan.
There has been no progress on Pakistan and the IMF’s seventh review talks for the release of the next loan tranche following the breaches committed by the government on different fronts. The IMF showed concerns about the PM’s relief package.
Shaukat Tarin, the Federal Minister for Finance and Revenue, claimed that a staff-level agreement between Pakistan and the IMF would be completed this week, as the Fund had requested details of the agreement between the Centre and provinces for financing the Prime Minister’s Relief Package, which saw diesel, petrol, and electricity prices frozen at current levels until June 2022.
The falling current account deficit failed to tempt investors, and the currency continued to fall to new lows, contrary to market forecasts.
The currency is under pressure due to greater demand due to commodity prices, according to Pakistan-Kuwait Investment Company Head of Research Samiullah Tariq, who spoke to Geo tv earlier.
He had said: “The local currency is now showing signs of the impact of the recent commodity price hike witnessed in the international market.”
