Pak rupee sinks further against US dollar

ISLAMABAD: Pakistani currency dropped against the US dollar in the inter-bank market yet again on Tuesday.

On the outset of the trading day, the US dollar appreciated 27 paisa against the local currency and settled at PKR287.90 today. On Monday, the local currency had settled at USD287.63 in the interbank market.

Meanwhile, the foreign exchange reserves of the State Bank of Pakistan (SBP) have declined by USD72m to USD4.31bn.

Traders expect the rupee to weaken due to the recently revealed budget and the absence of proposals for forex support. They believe this will have long-term effects on the value of the rupee.

It is important for Pakistan to satisfy the International Monetary Fund (IMF) regarding the federal budget to align with the lender’s objectives. The government has offered some tax breaks and set a high revenue collection target, but IMF approval is needed for the budget to become effective.

On the subject of IMF’s expectations for budget 2023-24 per media reports. “Growth targets aren’t complimenting Friday’s budget reveal. Like it or not, a sentiment-driven exchange rate market like Pakistan will always be impacted by unsupported economic policies. Expect mini-budgets after interim setups takeover after a few months,” according to news website Propakistani while quoting a trader.