Pakistan rupee drops to record low as import restrictions ease

By Ariba Shahid

KARACHI, Pakistan (Reuters) – Pakistan’s rupee closed at a record low of 299 rupees against the dollar in the interbank market on Tuesday following an easing in import restrictions that has lifted demand for the dollar, central bank data showed.

Pakistan imposed import restrictions from 2022 to stem outflows from its shrinking foreign reserves. The removal of those restrictions beginning in June was a condition of a $3 billion International Monetary Fund loan programme to help the crisis-ridden economy.

Traders said the rupee fell 0.6% to an intraday low of 299 against the dollar. On May 11, it logged a record closing low of 298.93. That was two days after former prime minister Imran Khan was arrested on allegations of graft, plunging the country further into political turmoil.

Pakistan is currently being governed by a caretaker government that is tasked with steering the country through to a national election that is in theory due to take place by November, while grappling with acute political tension as well as historically high inflation and interest rates.

Tahir Abbas, head of research at Arif Habib, a Karachi-based brokerage company, said he expected the rupee to trade between 295 and 305 to the dollar for the time being.

“The declining trend is mainly attributable to the ease off in the import restrictions coupled with clearance of backlog for goods and services,” he said.

He added that multinational corporations were able to repatriate some profits, furthering rupee outflows.