KARACHI: The Pakistani rupee is expected to remain under pressure next week as a political crisis looms in the country ahead of the vote of no-confidence against Prime Minister Imran Khan, citing traders.
The foreign exchange market closed at record lows during five sessions after witnessing a volatile week as the rupee plunged by 0.88%. Meanwhile, the local unit finished at 178.98 at the start of the week and ended at a new low of 180.57 against the dollar on Friday.
“The sentiments are the driving forces for market besides the demand and supply and we anticipate a further gradual depreciation of the rupee in the coming days in the effect of the political uncertainty and worries about the next tranche of International Monetary Fund loan,” a forex trader said.
He said, however, the investor nerve, improving sentiment on the rupee and bolstering outlook for the external current account may be soothed by a better than expected current account deficit reading for February.
The current account deficit dropped to $0.5 billion in February from $2.531 billion a month earlier, mainly driven by increase in exports and decrease in import payments. Pakistan’s foreign direct investment (FDI) increased 6% to $1.257 billion in the eight months of this fiscal year.
In February, the FDI fell 34% to $91 million. It had stood at $137 million in the same month of last fiscal year. The country’s political temperature heated up after the opposition parties moved a no-confidence motion, seeking the ouster of Prime Minister Imran Khan. The no-confidence resolution is expected to be presented on Monday.
There are fears that the opposition parties will agitate and disrupt the OIC moot if the government creates hurdles in tabling the non-confidence move.
There has been no progress on Pakistan and the IMF’s seventh review talks for the release of the next loan tranche following the breaches committed by the government on different fronts. The IMF showed concerns about the PM’s relief package. However, the government said the review talks would continue soon.
The IMF on Saturday said the talks were ongoing and the discussions with Pakistani authorities were constructive. “Last month, our board concluded our article IV consultation and completed the sixth review under the program, the financing program that we have with Pakistan, and that allowed for disbursement of about a billion dollars under the program,” said Gerry Rice, Director Communication IMF in a press briefing. “Discussions continue, I would characterize those discussions as constructive.”