Following the lifting of import restrictions that increased demand for the dollar, Pakistan’s rupee closed at a record low of 299 rupees against the dollar on Tuesday in the interbank market, according to statistics from the central bank.

In order to stop the drain on its dwindling foreign reserves, Pakistan introduced import restrictions beginning in 2022. It was a requirement of a $3 billion loan programme from the International Monetary Fund to support the crisis-ridden economy that such limits be lifted starting in June.

According to traders, the rupee dropped 0.6% to a day’s low of 299 against the dollar. It recorded a record-low closing low of 298.93 on May 11. That was two days after former prime minister Imran Khan was detained on graft-related charges, further destabilising the political situation in the nation.

In the midst of extreme political unrest, record high inflation and interest rates, and a general election that is theoretically scheduled to take place by November, Pakistan is currently being ruled by a caretaker government.

According to Tahir Abbas, head of research at Karachi-based trading firm Arif Habib, the rupee is now forecast to trade between 295 and 305 to the dollar.

“The declining trend is mainly attributable to the ease off in the import restrictions coupled with clearance of backlog for goods and services,” he said.

He continued by saying that because international firms were able to repatriate some profits, rupee outflows increased.

(Adapted from Investing.com)

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