Aamir Qureshi—AFP
The Pakistani rupee on Thursday hit 300.22 against the U.S. dollar in the interbank market, a new historic low, as the national currency’s unabated slide continues with no end in sight.
According to a statement issued by the State Bank of Pakistan (SBP), the rupee dropped by 0.19%, or 0.58 over the past 24 hours, closing at 300.22 against 299.64 a day earlier. This is a historic low for the Pakistani rupee, with the national currency struggling to play catch-up with the open market rate, which has now hit Rs. 315, according to the Exchange Companies Association of Pakistan (ECAP).
Under an agreement with the International Monetary Fund (IMF), the differential between the open market and interbank rates cannot exceed an average of 1.25 percent over five days. The current difference is roughly 5 percent, indicating further devaluation in the days to come, likely boosting inflation and the country’s debt burden.
Experts maintain that a key reason for the current round of devaluation is an increase in the demand for dollars following the withdrawal of import restrictions. At the same time, some markets have reported “panic buying” of dollars, further causing shortages, as citizens seek the to collect the U.S. currency before its value rises even further. Worsening the situation has been a decline in exports and remittances, boosting dollar shortages and resulting in a current account deficit after several months of surplus.