For the second day in a row, the rupee sank to an all-time low against the dollar on Tuesday, reaching Rs224 in the interbank market.
The greenback was up Rs8.8, or 4%, from the previous day’s close of Rs215.20, reaching Rs224 about 2:30pm, according to the Forex Association of Pakistan (FAP).
According to Mettis Global Director Saad Bin Naseer, the rupee is falling due to “panic buying [of the dollar] by banks in the interbank market.”
He stated that “panic is settling in the financial markets as a result of fears of change in [the] administration in Punjab and the Centre” following the by-elections for the province’s 20 seats.
The PTI easily defeated the PML-N, which heads the government coalition, in the by-elections. Following its victory, the PTI has called for early elections.
Naseer went on to explain that the Fitch rating agency’s downgrade of Pakistan’s outlook from stable to negative heightened market panic.
Furthermore, he stated that demand for the dollar had “spiked” among importers since the future of inflows from the International Monetary Fund (IMF), friendly countries, and bilateral sources remained uncertain.
Khurram Schehzad, chief executive officer of investment firm Alpha Beta Core, also attributed the rupee’s quick depreciation to Fitch’s downgrade and the worldwide trend.
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