The Pakistani rupee on Wednesday plunged to an all-time low of Rs240 against the US dollar in the inter-bank market as the currency remained under pressure due to a bullish US Federal Reserve among high oil prices.
This is the 14th consecutive working day of the rupee's freefall. The local currency had closed at Rs238.91 on Tuesday.
Cumulatively, the rupee has lost around 12% (or Rs25.40) in the 14 days to date compared to August 1, 2022 closing at Rs214.60.
In the recent past, the Pakistani currency hit its former record low of Rs239.94 on July 28.
The downward streak in the rupee led to it becoming the worst performing currency in the emerging markets on Tuesday.
An emerging markets analyst said that the delay in inflows of promised funds from Gulf Cooperation Council (GCC) countries had impacted the rupee.
Conversely, a month ago, the local currency won the title of the best-performing currency in emerging markets in August 2022.
The IMF approval of the loan tranche of $1.16 billion had also supported the currency’s stabilisation, the analyst said.
Read Govt in anxiety over rupee's slide
Experts said the rupee is weakening mainly due to the dollar strengthening against world currencies as the Fed hinted at increasing interest rate by 0.75% in the forthcoming monetary policy of the US.
Besides, losses incurred by the devastating floods increased the demand for the greenback to import agricultural products including cotton. Textile exporters are fearing losing orders amid high inflation in the west.
Accordingly, the Pakistani rupee may remain under pressure against the greenback.
Inflow 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 period of 12 months. Islamabad, however, has not yet given a concrete roadmap for the inflow of investment.
In the meantime, Saudi Arabia has rolled over deposits worth $3 billion in the State Bank of Pakistan (SBP) for one year. This is separate from the $6.2 billion investment pledged by the GCC economies.
The kingdom has yet to announce a plan as to how and when it will supply oil on deferred payments worth $1.2 billion over a period of 12 months, which is part of the GCC investment programme.