Rupee Hits Historic Low at Rs299 Against US Dollar

In the interbank market, the Pakistani rupee has plunged to a new historic low of Rs 299 versus the US dollar, raising fears about rising import costs and escalating difficulties in servicing foreign debt. This depreciation, which is being driven by an increase in demand for US dollars, highlights the country’s economic woes.

Factors Affecting Currency Depreciation:

Increased demand for clearing import backlogs, paying for international airlines, and the repatriation of dividend money by foreign investors are all reasons for the rupee’s 0.63% depreciation to Rs299.01 against the dollar. This depreciation, which is indicative of the expected trend of the rupee’s value in the early days of The Caretaker Government, has not been stopped by increased currency reserves or cumulative inflows.

Global and local influences:

The US dollar’s appreciation against other currencies coincides with the rupee’s depreciation. In the first eight days of The Caretaker Administration, the currency has declined by 3.52%, or Rs10.52. Additionally, the open market rupee reached an all-time low of Rs313/$, creating a large difference in currency rates between the inter-bank and retail markets.

Future Projection and Current Account: 

The rupee has weakened even more as a result of rising dollar demand to pay for the current account imbalance. Analysts are wary of a major strengthening of the rupee despite the anticipated inflows of foreign currency because of the ongoing demand for the dollar.

Gold’s Surge Amidst Rupee Depreciation: 

The weakening of the rupee has caused gold prices to soar, reaching a three-month high of Rs234,500 per tola. Investor demand for safe-haven assets in response to the effects of rupee devaluation is credited with driving this boom.

The unprecedented low of the rupee against the dollar has substantial economic ramifications for Pakistan, affecting imports, repayment of foreign debt, and trade balance. The intricate interplay of domestic economic issues and global currency dynamics highlights the necessity of smart steps to maintain the rupee and improve economic resilience.