Rupee falls to historic low of 299 vs dollar
The Pakistani rupee has hit a historic low against the US dollar due to increased demand for the dollar following eased import restrictions and political uncertainty ahead of the general elections.
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Posted 8/22/2023, 8:15:51 AM
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Pakistan's rupee dropped to a record low due to the easing of import restrictions, which has increased demand for the dollar.
The depreciating exchange rate of the Pakistani rupee against the US dollar is leading to a potential economic disaster, with increased inflation, higher prices for petroleum and fuel, and a rise in poverty and unemployment.
The Pakistani stock market closes lower due to concerns about the weak rupee and a bleak economic outlook, despite some support from MSCI raising Pakistan's weight in its Frontier Markets Index.
The Pakistani rupee weakened further against the US dollar in the interbank market due to higher demand and uncertainty, while the open market remained stable; however, insiders noted that currency dealers were selling the dollar at higher rates in the open market.
The rupee's decline against the US dollar is being attributed to the powerful influence of the grey market and the International Monetary Fund's involvement in Pakistan's financial system, leading to a loss of control over the exchange rate and economic uncertainties.
The Pakistani rupee has fallen below 300 to a US dollar due to factors such as the rise of the dollar, uncertainty surrounding general elections, and a political/judicial/constitutional crisis, resulting in eroded business confidence, increased inflation, and reduced industrial output.
The Indian rupee weakened against the U.S. dollar due to demand from state-run banks and the potential impact of U.S. GDP data.
The Indian rupee is expected to open higher against the US dollar following a downward revision to US economic growth in the second quarter, but experts suggest the rupee may struggle to maintain its gains.
The Pakistani rupee is expected to trade within a narrow range against the dollar in the upcoming week following its recent sharp depreciation, although some analysts anticipate continued pressure on the currency due to capital withdrawals, political unrest, and economic uncertainty.
The current economic crisis in Pakistan is driven by high inflation, mismanaged policies, and failure to ensure price stability, leading to a weakened currency and a struggling middle class, but implementing radical reforms such as demonetization and swapping out foreign currency debt can potentially alleviate the situation and revive the economy.
The Indian rupee hits a 10-month low against the US dollar due to concerns over rising oil prices and a decline in Asian currencies.
India's rupee is expected to remain close to its historic low in the next six months, despite efforts by the Reserve Bank of India to reduce volatility, with over a third of analysts predicting a new low within a year.
The Indian rupee could reach record lows against the U.S. dollar if oil prices continue to rise, according to the head of global foreign exchange at Jefferies, Brad Bechtel, although he believes the rupee will be one of the more stable currencies in emerging markets. The rupee is currently moving between 83 and 85 against the U.S. dollar, and if oil prices were to fall, it could fall close to the 82 levels.
The Pakistani rupee's rise against the dollar is attributed to a crackdown on hoarding and illegal outflows of the greenback as well as increased vigilance in the Afghan transit trade.
The Pakistani rupee has depreciated significantly in the first three weeks of the interim government's tenure, reaching a record low and making it the worst-performing Asian currency this quarter, due to factors such as a change in government and high inflation. The State Bank of Pakistan is implementing measures to address the economic challenges, including reforming the exchange rate and modernizing the banking system.