KARACHI: With devastating floods impeding economic activity in the nation, the Pakistani rupee fell against the US dollar for the 13th session in a row on Tuesday. Despite assurances from the government, the market’s assessment of the local currency hasn’t changed.
More than 33 million people were affected, more than 1,500 individuals lost their lives, and the record floods cost the economy at least $18 billion and maybe as much as $30 billion. The local currency decreased by Rs1.09 during intraday trading on the interbank market, dropping from its previous close of Rs237.91 to Rs239 per dollar.
The decline can be ascribed to a number of causes, including growing import costs following the worst floods and the country’s dollar reserves drying up, as well as the continued surge in dollar demand from local importers.
The beginning of floods and associated negative effects on the country’s external balance, whereby the loss of crops would now need to be made up through imports amid weak external flows, were to blame for the recent slide in the currency.
“The rupee will most likely rebound as soon as foreign flows start to appear, which they will eventually do. It should be underlined that the IMF (International Monetary Fund) program covers all of the country’s requirements for external financing,” Hashmey continued.