PKR falls to record low, closes at Rs299 to dollar in interbank

The Pakistani rupee fell by Rs1.88 against the US dollar during interbank trade on Tuesday, extending its losses from the previous week.

The greenback was changing hands in the interbank market at a record Rs299.01 at closing.

In the open market, the dollar was changing hands for Rs306, according to the Exchange Companies Association of Pakistan.

The local currency closed at Rs297.13 on Monday, rising by Rs1.35 from last week’s close of Rs295.78, according to data shared by the Exchange Companies Association of Pakistan (ECAP).

Pakistan imposed import restrictions from 2022 to stem outflows from its shrinking foreign reserves. The removal of those restrictions beginning in June was a condition of a $3 billion International Monetary Fund (IMF) loan programme to help the crisis-ridden economy.

On May 11, it logged a record closing low of 298.93.

Financial consulting firm Alpha Beta Core chief executive Khurram Schehzad said the IMF’s condition for its bailout to ensure open market-interbank parity had resulted in the rupee’s “excessive” weakening.

“As I said earlier, the policy of following open market parity (with 1.25pc prem) was flawed, thus difficult to sustain,” he told Dawn.com. “This has been witnessed in [how] the open market [is] driving the formal market (interbank mkt), and excessively weakening the PKR.”

Tahir Abbas, head of research at Arif Habib, a Karachi-based brokerage company, told Reuters that he expected the rupee to trade between 295 and 305 to the dollar for the time being.

“The declining trend is mainly attributable to the ease off in the import restrictions coupled with clearance of backlog for goods and services,” he said.

He added that multinational corporations were able to repatriate some profits, furthering rupee outflows.