Amid political turmoil, Pakistan’s currency faces historic low

Amidst a backdrop of economic fragility and reliance on foreign aid, Pakistan’s currency, the rupee (PKR), has once again fallen dramatically against the US dollar, marking a distressing record low, the country’s central bank reported. From Islamabad, the State Bank of Pakistan highlighted the US dollar’s trading value at a staggering 307.10 PKR in Tuesday’s interbank market session, as informed by the Xinhua news agency.

Just a day prior, the US currency had closed at its then-record low of 305.64 rupees. In merely a day, during the second trading session of the week, Pakistan’s local currency depreciated by 1.46 PKR. This decline translates to roughly 0.48 per cent against the dollar, as shown by official metrics.

Faheem Sardar, the founder of the reputable economics think-tank Tangent and a corporate advisory body, shared his insights with Xinhua. According to Sardar, three pivotal factors — supply dynamics, market manipulation, and rampant speculation—are at the heart of the rupee’s plummeting value.

Significantly, he highlighted an alarming trend: a considerable amount of dollars are being funneled to a neighboring country, bypassing conventional banking routes, thus escalating its demand within Pakistan’s domestic sphere. Furthermore, Sardar emphasized a concerning void in the realm of oversight: the central bank’s absence of effective surveillance mechanisms. This has unwittingly enabled market forces to manipulate the value of the US dollar in relation to the rupee.