KARACHI: The Pakistani Rupee (PKR) on Friday crashed against the dollar owing to political instability following by long march started by Pakistan Tehreek I Insaaf (PTI).
The exchange rate recorded a decline of 97 paisas in rupee value to end at PKR 222.47 to the dollar from previous day’s closing of PKR 221.50 in the interbank foreign exchange market.
READ MORE: Dollar climbs to PKR 221.50 on rising political tension
The rupee lost PKR 2.74 against the dollar during the last three sessions since the PTI chief announced the protest rally.
PTI Chief Imran Khan was removed as prime minister through a vote of no confidence by the allied political parties in April this year. Imran Khan claimed that his government was toppled by a conspiracy.
Prior to the announcement of the long march, the rupee witnessed recovery against the greenback due to removal of Pakistan name from the grey list of the Financial Action Task Force (FATF).
Further, the sentiments were also improved due to commitment of Asian Development Bank (ADB) to finance the country. The ADB approved a financing of $1.5 billion to the country. Currency experts said that the approval of loan program by the ADB helped the rupee to make gain.
READ MORE: Rupee slips sharply to dollar on PTI long march
Interestingly, the amount of $1.5 billion was received last night by the State Bank of Pakistan (SBP). However, the fund transfer also failed to support the local currency.
Previously, the rupee was also supported by contraction in current account deficit during the first quarter of the current fiscal year.
Pakistan’s current account deficit has recorded a decline of 37 per cent to $2.21 billion during first quarter (July – September) of fiscal year 2022/2023, according to official data released last week.
READ MORE: Rupee recovers to PKR 219.73 against dollar
The current account deficit of the country was $3.53 billion in the same quarter of the last fiscal year.
Contraction in current account deficit can be attributed to significant fall in trade deficit. The trade deficit also contracted by 21.32 per cent to $9.22 billion during first quarter of the current fiscal year as compared with the deficit of $11.72 billion in the same quarter of the last fiscal year.
READ MORE: Dollar slips to PKR 220.41 on improved economic sentiments
Furthermore, the local currency also received support as the level of foreign exchange reserves were remained flat.
Pakistan’s weekly foreign exchange reserves increased nominally to $13.251 billion by week ended October 14, 2022 as compared with $13.247 billion a week ago i.e. October 7, 2022.