KARACHI: The political chaos has started taking its toll on the economy as the rupee hit a record low of Rs100 against the US dollar in the open market on Wednesday.

Currency experts and dealers said the political instability in the aftermath of ongoing sit-in in Islamabad demanding ouster of the government and arrest orders of the prime minister by the Supreme Court had created panic-like situation in the currency market.

“We have traded dollar at Rs100 while the rate fluctuated at different places with slight difference of price,” said Anwar Jamal, a currency dealer.

However, banks showed strength against panic and the dollar was selling around Rs97.65 in the interbank market. The currency dealers said the banks received strict advice from the State Bank not to go beyond Rs97.65.

“But the trading inched up to Rs97.69 at the closing,” said a senior banker and currency dealers.

“The State Bank did not inject dollars to release pressure on demand but it used some large banks to stay there for controlling the unusual dollar demand,” said Atif Ahmed, a currency dealer in the interbank market.

He believed the dollar would gain more in the inter-bank market on Thursday as the persistent demand would push the dollar prices further up. The bankers said despite no big payments in coming days, the dollar was getting weight against the rupee, which signifies that some other factors are also acting upon the exchange rate.

They maintained the inter-bank market did not accept the political pressure as was visible in the open market. “However, we are not sure how long the inter-bank currency market will resist the pressure which has created a panic in the political arena of the country,” said Atif.

The rupee is under pressure of low foreign exchange reserves, poor foreign investment, higher outflow for debt repayments and other external obligations amid weakening of key economic indicators, current account deficit and large trade deficit.

Chairman Exchange Companies Association of Pakistan Malik Bostan said the rupee was close to Rs100 against the dollar.

“The rupee had bounced back against the dollar when it reached close to Rs100 a couple of weeks ago. I still believe the rupee will gain soon against this panic dollar buying,” he said.

However, he said the political crisis must be resolved soon otherwise the dollar would keep appreciating against the local currency.

The rupee has fallen by the 58 per cent against the US dollar in the last five year.