The rupee experienced a significant drop on Tuesday, registering a 0.6% decline against the US dollar in the interbank market. This depreciation is attributed to a relaxation in import constraints, resulting in increased demand for the dollar.
During intraday trading, the local currency weakened by 1.87 against the greenback, reaching an exchange rate of 299, as reported by the Exchange Companies Association of Pakistan (ECAP).
The previous lowest point was reached on May 11, when the rupee touched 298.93.
In comparison to Friday’s closing rate of Rs295.78, the rupee concluded Monday’s trading at 297.13 against the dollar.
Tahir Abbas, Head of Research at Arif Habib, anticipates the rupee to fluctuate within the range of 295 to 305 against the dollar in the immediate future. He attributes the declining trend to the relaxation of import restrictions and the clearance of backlog for goods and services. He also notes that multinational corporations have been able to repatriate profits, leading to further outflows of the rupee.
Adnan Agar, Director at AA Commodities, highlighted political factors as contributing to the rupee’s depreciation. He explained that concerns about potential delays in general elections and subsequent commitments to the International Monetary Fund (IMF) and other global lenders have led to uncertainty. The ongoing political instability raises questions about investment and lending prospects for the country, Agar noted. He suggests that until there is clarity on the political landscape, the rupee is likely to remain volatile.