ISLAMABAD: The United States (US) dollar continued to rise against the Pakistani currency and closed at an all-time high of Rs211 in the interbank market on Tuesday, amid a delay in the revival of $6 billion International Monetary Fund (IMF) program stalled since March.
The Pakistani currency depreciated 0.72 percent, or Rs1.52, against the US dollar, the Pakistani central bank said, as the country awaits the much-needed foreign inflows, mainly from the IMF. The greenback closed at Rs211.48 in the interbank market on Tuesday.
The South Asian country is in talks with the IMF to get the $6 billion program revived, which will immediately release around $1 billion, vital to boost Pakistan’s depleting forex reserves. The revival of the program will also help unlock funding from other bilateral and multilateral sources.
Currency analysts say the Pakistani rupee is “overvalued” against the greenback and is the worst performer in the entire region.
“The rupee traded as low as Rs216 against the dollar during Tuesday’s session,” Zafar Paracha, a senior currency analyst, told Arab News.
“Pakistani rupee is overvalued against dollar as compared to other regional currencies. Our currency is now the worst performer in the region.”
Currency dealers say the continuous fall in foreign exchange reserves and the rising demand for dollar for the import of commodities, including oil, is exerting pressure on the local currency.
Pakistan urgently needs funds in the face of dwindling foreign exchange reserves that have dropped to $8.2 billion — barely enough for 45 days of imports — in the week ending on June 16.
“The revival of the IMF program is expected to provide some support to the [Pakistani] currency,” Paracha said.
Analysts believe the Pakistani currency will remain under pressure due to a lack of foreign inflows, but the government, through successful negotiations with the IMF, could unlock funding that would ultimately ease pressure on rupee.
“The Pakistani currency should be at around Rs190 against the dollar in the short term and around Rs160 in the long term,” Paracha added.