Pakistan Economic Crisis: Country's Rupee Plunges To Record Low Of 299 Against US Dollar

New Delhi: The Pakistani rupee slumped to a record low of 298 against the US dollar amid political tumult in the wake of clashes that broke out in the country following the arrests of senior leaders of the Pakistan Tehreek-e-Insaf (PTI), including Imran Khan, media reports said.

The local unit fell Pak Rs 8.78, or 3.02 per cent, against the dollar on Thursday and was trading at 299 in the interbank market, Geo News reported. The dollar bonds due 2031 fell to the lowest since November on Thursday and were indicated at 33.10 cents on the dollar. The new rate is just Re 1 away from the much-anticipated rate of Rs 300 per dollar, Geo News reported.

The rupee depreciation has piled up foreign debt without taking new external loans, making imports further expensive for Pakistan, which faced a six-decade high inflation reading at 36.4 per cent in April 2023. Financial pundits believe that the rupee has been depreciating due to political and social unrest caused after the arrest of PTI Chairman Imran Khan, Geo News reported.

Moreover, the dollar demand-supply gap has also widened as the exporters have stopped selling US currency on speculations that rupee would depreciated further versus the greenback. On the other hand, importers are seen rushing to buy dollars. This gap in the demand and supply of the foreign currency in the interbank market has contributed to the rupee`s devaluation.

Khaqan Najeeb, former finance ministry advisor, said that continuing political instability has taken a toll on market sentiments, pushing the Pakistani rupee to hit a record low.

"The heightened political turmoil has come at a time when the economy has been in the doldrums for months, largely due to an acute balance of payment crisis, with falling State Bank of Pakistan reserves barely covering a month of highly controlled imports," he said.