Pakistani rupee hits new low, likely to fall further

The Pakistani rupee hit an all-time low versus the UAE dirham and the US dollar on Thursday and the market expects the South Asian currency to slide further.

The rupee fell to 39.48 versus the UAE dirham on Thursday  compared to 38.5 on Wednesday, according to xe.com. In the open market in Pakistan, the UAE dirham was being bought for 39.80 and sold for 40.40 versus the rupee on Thursday.

In the intra-banking market, the rupee had fallen to an all-time low of 148 against the dollar on Thursday compared to 141.5 on Wednesday. But it later recovered and settled at 147.5 on Thursday.

The rupee has been under pressure due to shortage of the US currency in Pakistani forex markets. Prime Minister Imran Khan on Tuesday set up a committee under advisor to the PM on finance Dr Hafeez Sheikh to rein in rupee devaluation and capital flight from the country.

The market is expecting that the rupee could depreciate further against the greenback due to an agreement reached between Islamabad and the International Monetary Fund on a $6 billion bailout package.

But former finance minister Asad Umar rejected this notion that the decline in the rupee's value on Thursday is linked to the IMF agreement.

Rajiv Raipancholia, CEO pof Orient Exchange, had told Khaleej Times earlier that rupee can depreciate to 40 against the dirham in 2019. "It looks more on the weaker side," Raipancholia had earlier said.

"The concentration needs to evolve around current account balance by promoting exports and reducing imports. Schemes are required to attract deposits and a climate needs to be created to boost the confidence of foreign investors so that there can be more foreign investments," he added.

The persistent drop in the rupee is seen as a boon for expatriate Pakistanis as they will be able to remit more funds. Considering Eid Al Fitr is around the corner, it is expected that the remittances from the UAE and other countries will increase substantially this month.

Remittances from overseas Pakistani reached $17.87 billion in first 10 months (July to April) of the 2018-19 fiscal year, a growth of 8.45 per cent compared with $16.48 billion received during the same period in the preceding year.

- waheedabbas@khaleejtimes.com