KARACHI: The rupee on Wednesday plunged to an all-time low above Rs190 against the US dollar reflecting the deepening of the economic crisis after the ouster of the PTI government last month.

The US dollar on a day-on-day basis appreciated by Rs1.36 against the local currency to a new peak of Rs190.02 in the interbank market, according to the State Bank of Pakistan (SBP). During the current fiscal year, the rupee lost 17.09 per cent against the dollar, so far, proving it the worst financial year for the exchange rate.

Meanwhile, despite gold recorded a drop of $11 per ounce on the internationa market to $1,852 on Wednesday, the local bullion traders pushed up the precious metal rates of one tola and 10 grams to a new peak of Rs135,700 and Rs116,341, respectively, showing a jump of Rs1,300 and Rs1,115 from Tuesday.

Gold surges to Rs135,700 a tola

The day-to-day devaluation of local currency could cause a serious panic-like situation as investors were found clueless. The rising inflation and the devaluation of the local currency mean the declining purchasing power of consumers as traders ask for higher profits to save their investments.

Currency experts and dealers said there was fear that the rupee would fall more rapidly in the coming days unless and until inflows from anywhere appears on the horizon.

“What to do when there is no hope for foreign inflows,” said a senior banker, adding that a serious kind of disappointment has gripped the market. The depressing situation has created space for the speculators.

“The speculators will destroy the exchange rate more than the expectations of the economic managers,” said the banker.

The exchange rate had remained under pressure due to rising imports, which surged to $65.5 billion during the first 10 months of FY22.

The PML-N government has so far failed to tackle this complicated economic situation as it couldn’t secure any inflows from anywhere while the country’s foreign exchange reserves have been depleting fast.

It expects a release of $1bn from IMF but so far no concrete negotiation has yet taken place. A delegation of IMF is expected during the current month.

Also, China has yet not rolled over $2.3bn despite a lapse of over a month. Furthermore, about 30 Chinese companies running power plants have asked the Government of Pakistan to clear payment of Rs300 billion forthwith otherwise they will not be left with no option but to shut down these plants this month.

Published in Dawn, May 12th, 2022