The rupee lost more ground versus the dollar, reaching a record low of Rs239.94 in the interbank market.
As of 12:03 p.m., the rupee has lost 4.48, or 1.89 percent, compared to yesterday’s close of 236.02, according to the Forex Association of Pakistan (FAP).
As a result, the rupee was trading at 240.5 to the dollar.
The rupee fell 3.92, or 1.63 percent, to close at 239,94, according to the State Bank of Pakistan (SBP).
— SBP (@StateBank_Pak) July 28, 2022
The fault was fully placed on the political climate of the nation and the inaction of the government, according to Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan.
“The political climate in the country is dire, yet the administration and political parties don’t seem bothered. They only care about preserving their regime, he lamented.
The tranche that the International Monetary Fund (IMF) was supposed to release had reportedly been delayed, and ratings agencies had reduced Pakistan’s outlook.
Additionally, it was unclear if the Fund’s executive board would request additional activities before the tranche was released.
According to him, “we are not doing what we are supposed to do and not taking any practical steps,” which is the underlying cause of the rupee’s collapse.
The currency broker said that poor management and a lack of attention had caused the financial position to worsen.
He suggested that the government should reward exchange firms and Pakistanis living abroad, link imports to exports, and cut spending in order to stem the rupee’s freefall.
The population is acting responsibly and paying taxes, but the people in charge don’t appear to be taking any action, Paracha continued.
Banks were lacking in dollars, according to Saad bin Naseer, director of Mettis Global, who cited the “supply issue” as the cause. Remittances are at their normal level and there is a supply, but inflows are not what was anticipated.
He observed that the banks continued to lend money to importers. Market panic is there and would continue absent intervention by the State Bank of Pakistan (SBP).
According to Naseer, the SBP would act now since the market had reached a “exceptional level,” and then the panic would start to subside.
Mohammad Sohail, CEO of Topline Securities, claimed that “less involvement” by the central bank was one of the causes of the rupee’s decline.
Additionally, he continued, the government might be allowing the local currency to weaken in order to reduce imports.
He added that the continuous pressure on the currency may continue till the IMF tranche is released and further blamed it on the political climate in the nation.