The rupee’s downtrend persisted on Thursday as the currency dipped 0.28%, or Rs0.49, against the US dollar in the inter-bank market, touching a fresh all-time low of Rs173.96 due to fears of harsh measures that might be taken before resumption of the International Monetary Fund (IMF) loan programme.

According to the State Bank of Pakistan (SBP), the local currency had closed at Rs173.47 to a dollar on Wednesday. A report of Arif Habib Limited stated that the rupee had lost 9.44% of its value since the start of fiscal year 2021-22 and 12.46% since hitting the recent high of Rs152.28 on May 14, 2021.

Speaking to The Express Tribune, Arif Habib Corporation CEO and Managing Director Ahsan Mehanti remarked that the rupee was in a free fall mode due to no intervention by the central bank.

“Market sentiment is influencing direction of the currency ever since Pakistan adopted a flexible exchange rate,” he said. “Rising current account deficit and expectation of stringent measures before the resumption of IMF’s $6 billion programme have dampened spirits in the foreign exchange market.”

Read No respite in the rupee fall

The market believes that an agreement has been reached between Islamabad and the IMF but there is no clarity.

Stakeholders projected that the global lender would demand further depreciation of the rupee to arrest the ballooning current account deficit, the analyst said. According to Mehanti, the rupee will continue to fall until the terms of agreement with the IMF are made public. On the other hand, gold spiked Rs2,000 to Rs124,200 per tola. Gold is considered as a safe-haven investment and its price skyrockets in times of uncertainty.

Published in The Express Tribune, October 22nd, 2021.

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