Pakistani rupee continues downward slide, falls 8% on week

Annual performance worse than every currency except Sri Lanka's, Ukraine's

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By Reuters

Published: Fri 22 Jul 2022, 4:39 PM

Last updated: Fri 22 Jul 2022, 4:40 PM

The Pakistani rupee continued its downward slide for the sixth straight session, falling 0.68% against the dollar on Friday, taking its decline this week to nearly 8% and for the year to over 21%, according to central bank data.

The annual performance is worse than nearly any other currency, bar Sri Lanka's rupee and Ukraine's hryvnia .

The slide has deepened an already difficult economic crisis, as Pakistan struggles with depleting foreign currency reserves and a current account deficit.

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Interbank rates hit a historic intra-day low before recovering slightly to 228.37 Pakistani rupees to the dollar from 226.81 rupees on Thursday. It was at 210.95 rupees to the dollar when trading opened on the first trading day of the week, Monday and at 178.16 at the start of 2022.

The drop comes despite last week's staff level agreement reached with the International Monetary Fund (IMF) for the disbursement of $1.17 billion under resumed payments of a bailout package.

Mohammad Sohail, CEO of Topline Securities, told Reuters investors worried whether the government would be able to take corrective actions requested by IMF after losing provincial by-elections in the province of Punjab.

"Moreover there was some confusion on support from Saudi Arabia which as per news was necessary for IMF approval," he told Reuters.

Bloomberg on Thursday reported the IMF was assessing Saudi Arabia's commitment to helping with Pakistan's funding gap before the multilateral lender disburses fresh funds to the South Asian nation.

On Wednesday, Pakistan's finance minister, Miftah Ismail, blamed the rupee's slide on political turmoil and speculation, saying he expects market jitters over the currency's sharp decline to subside soon.

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A day later he said pressure on the rupee was also due to larger-than-expected import orders - particularly fuel - in June, payments for which were being made this month.

But that pressure eased in July and would be reflected in the currency by next month, he added.

He said the country had built up fuel reserves, which would lower import requirements for the next few weeks.

Reuters

Published: Fri 22 Jul 2022, 4:39 PM

Last updated: Fri 22 Jul 2022, 4:40 PM

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