As the political situation in Pakistan worsens, the value of the Pakistani rupee plummeted to an all-time low versus the US dollar during intraday activity on the interbank market on Monday, according to Geo News.
According to the State Bank of Pakistan, during intraday trading, the value of the rupee dropped to 230 from 228.37 (SBP).
Pakistan’s currency dropped about 8% versus the US dollar in the previous trading week, raising concerns about the country’s faltering economy. Meanwhile, the country’s foreign exchange reserves are below $10 billion and inflation is at its highest level in over a decade.
“Markets are responding to these shocks in an unduly broad-brush fashion, without paying enough attention to Pakistan’s relative strengths,” said Murtaza Syed, acting governor of Pakistan’s central bank, in a recent presentation to overseas investors.
A capital market specialist, Muhammad Saad Ali, said that the falling value of the rupee may be traced back to rising political instability over the future of the country’s leadership and the ongoing uncertainty over who controls the province of Punjab.
According to the SBP, “note that BoP (balance of payments) pressures on the currency have lessened,” meaning that Pakistan no longer needs to worry about its dollar outflows for the next 12 months.
I think political uncertainty is undermining market sentiment and resulting in greater PKR depreciation,” Ali remarked.
Mahnur is MS(development Studies)Student at NUST University, completed BS Hons in Eng Literature. Content Writer, Policy analyst, Climate Change specialist, Teacher, HR Recruiter.
