Pakistani Rupee Plummets to Record Low Against US Dollar

Pakistani rupee plummeted to a record low against the dollar in the interbank market on Tuesday, driven by the relaxation of import restrictions that boosted demand for the US currency. The nation had enforced these restrictions in 2022 to stabilize its dwindling foreign reserves. The recent removal of these restrictions, starting in June, was a requirement for a $3 billion IMF loan aimed at aiding the crisis-stricken economy.

Traders reported a 0.6% drop in the rupee to an intraday low of 299 against the dollar. This follows the record closing low of 298.93 on May 11, which coincided with the arrest of former Prime Minister Imran Khan on charges of land graft, exacerbating political turmoil in the country.

Currently, under a caretaker government, Pakistan is navigating its way towards a national election projected for November. However, the country grapples with intense political tensions, alongside historically high inflation and interest rates.

Tahir Abbas, the head of research at Karachi-based brokerage firm Arif Habib, anticipates the rupee to hover between 295 and 305 against the dollar in the immediate future. He attributes this decline to the easing of import restrictions and the clearance of backlogged goods and services. The outflow of rupees is also attributed to multinational corporations repatriating profits.