Pakistan’s rupee fell to a historic low of 191 against the dollar on Thursday as the ongoing political crisis shook confidence in the currency.
The rupee has been depreciating for months, but the fall intensified in March when opposition parties moved a no-confidence motion against Prime Minister Imran Khan, which led to the dissolution of the National Assembly last week.
The rupee has declined more than six per cent in a month, and was at 191 – and 189 – at the interbank rate on Thursday in the open market.
“Political disturbances have been triggered by uncertainty and have a negative impact on the rupee,” said Mohammad Sohail, head of Karachi-based brokerage and economic research house, Topline Securities.
Pakistan’s Supreme Court sat on Thursday to rule on the legality of the political maneuver that led Mr Khan to dissolve the national assembly.
Pakistan’s foreign exchange reserves, which depend on remittances from expatriates, have failed to contain the growing trade deficit.
Reserves have fallen from $16 billion to $12 billion since March, as the deficit reached 70 per cent for the nine months of the fiscal year spanning 2021-22.
The rupee has depreciated 18 per cent of its value against the dollar since July 2021.
Relations with the United States and the International Monetary Fund (IMF) are also important factors.
The IMF has approved a $6 billion bailout package for Pakistan to support the balance of payments issue in 2019.
Half had been paid, but the rest is being renegotiated.
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)