The rupee fell to an all-time low against the dollar for the second day in a row on Tuesday, reaching Rs222 in the interbank market.
According to the Forex Association of Pakistan (FAP), the greenback was up Rs6.8, or 3.1 per cent, against the previous day’s close of Rs215.20 to reach Rs222 around 1pm.
Mettis Global Director Saad Bin Naseer said the rupee was seeing a decline due to “panic buying [of the dollar] by banks in the interbank market”.
He said that “panic is setting in the financial markets following fears of change in [the] government in Punjab and Centre” after the by-polls on the province’s 20 seats.
The by-elections saw the PTI register a thumping victory against the PML-N, which leads the ruling coalition. Following the win, the PTI has demanded early elections.
Naseer went on to say that the downgrading of Pakistan’s outlook from stable to negative by the Fitch rating agency further increased panic in the market.
Moreover, he said, the demand for dollar among importers had also “spiked” as the future of inflows from the International Monetary Fund (IMF), friendly countries and bilateral sources remained a concern.
Chief Executive Officer of investment firm Alpha Beta Core Khurram Schehzad also attributed the rupee’s rapid decline to Fitch’s downgrading and the global trend.
“The dollar is getting stronger in the global market against almost all the world currencies. The Pakistani rupee is not an exception,” he said.
“In addition, Pakistan’s external account issues are not settled as yet. IMF is yet to be on-boarded and the flows are yet to materialise. Global rating agencies have put a negative outlook on the economy, so that is an additional burden that is weighing on the financial markets in general and foreign exchange market in particular.”
Schehzad called on all stakeholders to come together and devise a strategy to arrest the rupee’s fall.
