The Pakistani Rupee (PKR) crashed below the 242 level against the US Dollar (USD) during intraday trade today as political uncertainty continues to pile pressure on currency markets.
By midday, the local unit had lost Rs. 4.51 against the greenback and was trading at Rs. 242.26 in the open market. This is the second highest intraday drop in a week and the third biggest in over three years. Since 11 April, the dollar is up by Rs. 59.06 (intraday) against the PKR.
The rupee is under pressure due to a variety of factors, including the delay in the revival of the International Monetary Fund’s (IMF) program, the financing gap, and the incumbent government’s humiliating defeat in the Punjab elections. Market players argue that political instability poses a constant threat to Pakistan’s economy. Worries over Pakistan’s funding needs, a massive current-account deficit, and high inflation are all compounding, putting pressure on the local currency.
The South Asian nation’s current account recorded a significant deficit of $17.4 billion for the financial year 2021-22 (FY22) as against $2.82 billion reported during the financial year 2020-21 (FY21), stated the State Bank of Pakistan (SBP).
A surge in oil imports saw CAD rise to $2.3 billion in June despite higher exports and remittances. So far in July, oil imports are much lower and the deficit is expected to resume its moderating trajectory. Overall, the depreciation of the Rupee against the Dollar has also caused a steep increase in the current account deficit.
This is an intraday market update.
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