Rupee Falls to Lowest Level in History After Ishaq Dar’s Petrol Bomb [Updated]

Dollar pegging is fully out of the picture as the Pakistani rupee (PKR) fell by 2.81 percent against the dollar during intraday trade on Monday, dropping as low as 270 against the greenback after Finance Minister Ishaq Dar announced a Rs. 35 per liter petrol price hike in a surprise move on Sunday. This is the third consecutive intraday drop where the PKR has shed Rs.7 or more against the US Dollar, as markets look forward to the federal government’s upcoming meeting with the International Monetary Fund (IMF) when the lender’s delegation arrives tomorrow (January, 31st). At close, the rupee was down 2.61 percent against the greenback, dropping Rs. 7.03. It closed at an all-time low of 269.63, the local unit’s third consecutive record-breaking close since Thursday last week. In the open market, the domestic currency has dived by around 3 percent to a record low of 272 per US dollar compared with Friday’s highs of 261-266 per US dollar. The rupee fell 12.5 fell in the previous week, but the majority of the decline came at the week’s close after the currency was finally ‘freed’ against the US dollar in the inter-bank market. On Thursday, the PKR lost Rs. 24.54 and shed a further Rs. 7.17 the next day. On the condition of anonymity, a high-profile investment banker told ProPakistani that it is of no use comparing REER to rupee value as the ratio has drastically fallen after SBP’s late-hour switch to the free float model. He said, The local unit will likely depreciate significantly as part of the preconditions for reviving the IMF bailout. Given the free-float model, no one can predict how low the currency may fall. Tomorrow’s expected arrival of the IMF mission is expected to slow down the PKR slump but that respite may as well be momentary if Pakistan fails to satisfy the lender. The IMF earlier turned down Pakistan’s request for sending its team for the completion of the 9th review and asked the Finance Ministry to first take all prior actions. Following the lender’s clear message, a Rs. 300 billion mini-budget was announced, and the PKR has maintained its record-breaking slump for the past 3 days. The PKR was bearish against all of the other major currencies in the interbank market today. It lost Rs. 1.87 against the Saudi Riyal (SAR), Rs. 1.91 against the UAE Dirham (AED), Rs. 4.45 against the Australian Dollar (AUD), Rs. 5.18 against the Canadian Dollar (CAD), and Rs. 7.10 against the Euro (EUR). Moreover, it lost Rs. 8.86 against the Pound Sterling (GBP) in today’s interbank currency market.