AMN / WEB DESK
Fears about Pakistan’s faltering economy have increased as the country’s currency dropped by about 8% versus the US dollar last week, its foreign exchange reserves decreased to $9.3 billion as of July 15, and inflation is at its worst level in more than a decade.
The Pakistani rupee Wednesday plunged to a new low against the US dollar, which continued to strengthen for the ninth straight session during intraday trade in the interbank market.
The local unit is trading at Rs237 in the interbank market, up from Rs232.93 a day earlier, as it shed Rs4.07.
The rupee has been one of the world’s worst-performing currencies, slumping more than 30% since the start of the year (2022), The News reported.
But its depreciation is not limited to local dynamics as the greenback is now at a 20-year high against other world currencies, thanks in part to expectations that the Federal Reserve will increase its interest rates faster than most.
Apart from that, traders told The News that continuously deepening political uncertainty and the lack of dollar liquidity yielded pressure on the local unit.
“Banks are short of foreign currency as the central bank is not selling dollars to the market to curb the exchange rate volatility. Exporters are also not converting dollars and that has resulted in the scarcity of the greenback,” a foreign exchange trader told the publication.
“Some banks are opening fresh letters of credit if the outflow is equalised with the export proceeds of the clients.”