PKR plummets below 300, making history with its record low value

ISLAMABAD: The Pakistani rupee has experienced a sharp decline, hitting a record low of 298 against the US dollar due to political tumult in the country. This has caused concern among financial analysts and experts who worry about the impact of the currency’s devaluation on Pakistan’s already struggling economy.

The rupee fell by 3.02% against the dollar on Thursday, trading at 299 in the interbank market at 1:17 pm. This is just one rupee away from the much-anticipated rate of Rs300 per dollar. The drop in the value of the currency has piled up foreign debt, making imports further expensive for Pakistan. This has worsened the country’s economic situation, which already faced a six-decade high inflation reading at 36.4% in April 2023.

Financial experts believe that the rupee’s depreciation is due to political and social unrest caused by the arrests of senior leaders of the Pakistan Tehreek-e-Insaf (PTI) party. The political turmoil has had a significant impact on market sentiment, causing the rupee to reach a record low.

Furthermore, the demand-supply gap of the US dollar in the interbank market has widened, causing the rupee’s devaluation. Exporters have stopped selling US currency on speculations that the rupee would depreciate further versus the greenback. In contrast, importers are seen rushing to buy dollars, which has led to a shortage of dollars in the interbank market.

Dr. Khaqan Najeeb, a former finance ministry adviser, said that continuing political instability has taken a toll on market sentiment, pushing the Pakistani rupee to hit a record low. He added that “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.”

However, some financial experts believe that the political situation will improve in the coming days, stabilizing the currency or partially recovering its value against the dollar. Despite this, others are concerned that continuing political instability will negatively affect market sentiment and contribute to further economic problems in Pakistan.

In conclusion, the depreciation of the Pakistani rupee has caused concern among experts, who worry about the impact of the currency’s devaluation on the country’s already struggling economy. The political turmoil and shortage of US dollars in the interbank market are among the key factors contributing to the rupee’s devaluation.