Rupee stumbles amid political unrest

KARACHI: The rupee fell for a second straight day on Thursday amid political unrest ahead of a protest march to Islamabad announced by former prime minister Imran Khan to demand early elections.

The local unit ended at 221.50 per dollar, 0.37 percent weaker than Wednesday’s close of 220.68 in the interbank market. The rupee has depreciated by 0.80 percent during last two sessions.

In the open market, the domestic currency lost 1 rupee to settle at 225.40 per dollar. It had finished at 224.40 in the previous session.

“The market players were cautious as political unpredictability heightened ahead of Pakistan Tehreek-e-Insaf (PTI) long march,” said a currency dealer. “At the moment, there is little reason to be overly hopeful about the rupee, which significantly strengthened when Ishaq Dar was appointed the finance minister. Many uncertainties are currently developing on the political and economic fronts,” the dealer added.

As PTI leader Imran Khan reveals plan for his rally, the party’s long march is being prepared to up the ante against the government and force a date for early elections. The march will commence from Lahore’s Liberty Chowk today and is planned to reach Islamabad on November 4.

Analysts said apart from political chaos, the rupee’s slide was also because of increase in default risk of the country.

Investors were concerned about the country’s ability to repay its foreign debt after the country's five-year credit default swap soared by 3,071 basis points to a 13-year high of 52.8 percent on Monday on worries of default and rating downgrades.

Positive news on the inflows received from the Asian Development Bank on Wednesday was offset by a new round of political upheaval. The State Bank of Pakistan (SBP), on its official Twitter handle, said it had received $1.5 billion from ADB in value as disbursement of policy based loan for the government.