Karachi: The Pakistani rupee hit a low of Rs 240 against the US dollar in the interbank market on Wednesday as the currency came under pressure from the US Federal Reserve’s hike amid higher oil prices.
This is the 14th consecutive business day for the rupee to fall. The local currency closed at Rs 238.91 on Tuesday.
Overall, the rupee has depreciated nearly 12 percent (or Rs 25.40) in the 14 days to date against August 1, 2022 to close at Rs 214.60.
In the recent past, the Pakistani currency touched its previous record low of Rs 239.94 on July 28.
The fall in the rupee made it the worst-performing emerging market currency on Tuesday.
An emerging markets analyst said the delay in the arrival of promised funds from the Gulf Cooperation Council (GCC) countries has weighed on the rupee.
In contrast, a month ago, the local currency won the title of the best-performing emerging market currency in August 2022.
The IMF’s approval of a $1.16 billion loan tranche had also helped stabilize the currency, the analyst said.
Experts said the dollar’s strength against global currencies was weakening the rupee as the Fed signaled a 0.75 percent interest rate hike in the upcoming US monetary policy.
In addition, damage from catastrophic floods increased the demand for the greenback to import agricultural products, including cotton. Amid high inflation in the West, textile exporters fear losing orders.
Accordingly, the Pakistani rupee may remain under pressure against the greenback.
Transportation from friendly countries
In recent weeks, friendly Gulf countries including Saudi Arabia, the United Arab Emirates (UAE) and Qatar have pledged to invest a total of $6.2 billion in Pakistan over a 12-month period. However, Islamabad has not yet given a concrete road map for investment inflow.
Meanwhile, Saudi Arabia has deposited $3 billion in reserves with the State Bank of Pakistan (SBP) for one year. This is separate from the $6.2 billion investment pledged by GCC economies.
The kingdom has not yet announced a plan for how and when it will deliver the oil in deferred payments of $1.2 billion over a 12-month period, which is part of the GCC’s investment program.
