There was no respite from the declining rupee on Thursday as the currency dropped to a new all-time low of Rs176.42 against the US dollar on the back of a mammoth import bill for November and widening current account deficit.

According to the State Bank of Pakistan (SBP), the rupee had closed at Rs175.48 on Wednesday.

A report of Arif Habib Limited stated that the rupee fell 0.54% day-on-day while it had been down 13.68% since hitting the high of Rs152.28 on May 14, 2021.

In addition to that, according to the report, the rupee has depreciated 10.7% since the beginning of current fiscal year on July 1.

Speaking to The Express Tribune, Ismail Iqbal Securities Head of Research Fahad Rauf said that the lofty import figure drove the rupee’s decline.

“As per unofficial reports, imports into Pakistan are set to hit a historic high of $8 billion in November, which will widen the current account deficit to a record $2.5 billion,” he said. “This forecast mounted pressure on the rupee, which lost more ground.”

Echoing Rauf’s views, Arif Habib Commodities CEO and Managing Director Ahsan Mehanti said that government’s failure to arrest the growth in imports had weakened the rupee.

Read Rupee slides to new low as deficit widens

On the other hand, the State Bank of Pakistan and the Saudi Development Fund signed an agreement for depositing $3 billion in Pakistan’s central bank but so far the amount had not been received, he said.

“In the midst of the delay, Pakistan is poised to report massive current account and trade deficits, which will haunt the rupee,” he said.

Inter Market Securities Head of Research Saad Ali stated that the lack of news about receipt of $3 billion in loan from Saudi Arabia and the next International Monetary Fund (IMF) loan tranche dented market sentiment.

“Not just in the foreign exchange market, sentiment is fragile in the equity market as well,” he said.

Furthermore, the inability of the government to contain imports despite monetary tightening and rupee depreciation sparked concern among the public, he said.

Published in The Express Tribune, December 3rd, 2021.

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