Rupee hits new low against dollar, closed at Rs202.83 in interbank market

KARACHI: The rupee dropped to an all-time low of 202.83 against the US dollar in the interbank market after plunging the most in over two years as payments for oil imports added pressure on the local currency.

According to data released by the State Bank of Pakistan (SBP), the local currency shed Rs2.77, or 1.37%, to close at Rs202.83 surpassing its previous record low of Rs202 recorded on May 26.

The local unit broke all records today, dropping to an all-time low of 204 against the US dollar in the open market as demand increased due to oil-related payments and ambiguity regarding the revival of the multibillion dollars International Monetary Fund's (IMF) programme.

Moreover, for the first time in its history, the local currency made a historical drop of Rs4 in a single day and surpassed Rs204 threshold against the greenback in the interbank market during the intraday trade.

However, the market reversed the free fall and closed the day with a loss of nearly Rs3. This was the third consecutive workday free-fall of the rupee.

Speaking to Geo.tv, Arif Habib Limited Head of Research Tahir Abbas said the rupee is under pressure due to pending oil payments and rising oil prices in the international market.

“The plunge came on the back of a mammoth import bill and widened the current account deficit,” the analyst said.

Abbas added that the market is keeping a close eye on the developments regarding the International Monetary Fund (IMF) programme, which is expected to be revived after the announcement of the budget as the government is taking all possible steps to meet the conditions laid forth by the Fund.

Traders believe caution can be expected this week ahead of the unveiling of the federal budget for the fiscal year 2022-23 scheduled to be announced on June 10 (Friday), with investors expecting IMF conditions of fiscal consolidation to dominate.

Renewed pressure on the rupee on an increase in fiscal-year-end dollar demand from importers and the corporate sector will keep the local currency under pressure.