The rupee continued to depreciate against the dollar on Tuesday, losing another Rs1.1, or 0.38 per cent, in the interbank market.

According to the State Bank of Pakistan, the dollar traded for Rs286.39 in the interbank at the day’s end. It had closed yesterday at Rs285.29.

In the open market, the dollar was changing hands for Rs287.5 during the afternoon, according to the Exchange Companies Association of Pakistan (ECAP).

This is the 12th straight session in which the rupee trended downward. Since October 20, it has shed 2.9pc.

The downward trajectory ate into the recovery that the rupee experienced in September, following a clampdown on illegal currency markets.

Some bankers believe that a short supply of dollars and poor growth of exports could further weaken the local currency. Experts said the announc­ement of general elections on Feb 8, 2024, has attached some additional uncertainty in the political and economic scenario.

Currency experts said the demand has been high as the importers were keen to buy to save the future cost of dollars which may go up.

Raza Jafri, head of equities at Intermarket Securities, said that the rupee has been depreciating steadily after the REER-based valuation — real effective exchange rate measures the value of a currency in relation to its major trading partners — crossed 100.

He added, “It may now consolidate around current levels, with possible appreciation upon a successful IMF review that will unlock the 2nd tranche of the SBA[stand-by arrangement] programme.”

Mohammed Sohail, chief executive of Topline Securities, attributed the downward spiral to the opening of imports and dividend restrictions, coupled with IMF targets to keep the rupee in check.

However, he added that the rupee may stabilise after some more weakness.

Zafar Paracha, general secretary of ECAP, said, “The sentiments have changed. People became pessimistic about the rupee strengthening further. Because of this, exporters once again stopped selling their dollars.”

He added that every time the political and economic situation of Pakistan starts getting better, anti-state elements get active, whether they are outside or inside Pakistan.

“People regularly try to write off the rupee and create panic. Moreover, the Afghan refugees who are leaving, they are also smuggling as many dollars as they can.”

However, he added that Pakistan’s financial credentials were good. He said the company results looked promising, as the stock exchange reached an all-time high.