As per the State Bank of Pakistan (SBP), the rupee closed at 215.2 after depreciating 1.97%. This is the weakest closing level for the rupee. Its previous record low was 211.93 against the US dollar on June 22, 2022.

“It is the highest day-on-day depreciation (1.97%; PKR 4.25) after Mar 26, 2020,” said brokerage house Arif Habib Limited (AHL) in a note after the closing.

Analysts said calls for general elections gained momentum after Pakistan Tehreek-e-Insaf’s (PTI) victory in the elections held on Sunday, putting economic reforms on the back seat again.

In the by-elections for the 20 constituencies of the Punjab Assembly, unofficial results confirmed PTI victory on a majority of the seats on Sunday.

“By-election results have compounded pressure on the local currency, which was already under import payment pressure,” Samiullah Tariq, Head of Research at Pakistan Kuwait Investment Company, told Business Recorder.

Tariq said the by-election results have also raised concerns pertaining to the International Monetary Fund (IMF) programme, and clarity on this front is awaited.

On Friday, the rupee had closed at 210.95, a depreciation of 0.55% or Rs1.15, as pressure piled up due to import payments and the US currency’s strength.

During the previous week, the rupee depreciated 1.4% even as the International Monetary Fund (IMF) announced that it had reached a staff-level agreement with Pakistan on Thursday as the US dollar’s renewed strength and deteriorating economic conditions added to pressure on the local currency.

The rupee lost value in two of the three sessions, gaining only marginally on Thursday – the day the IMF staff-level agreement was announced – as investors bet on the US Federal Reserve ratcheting up interest rates to combat soaring inflation, adding to the dollar strength against the rupee.

Additionally, Pakistan saw its foreign exchange reserves fall further, with analysts saying that pending import payments were also adding their weight on the rupee’s downward slide.

Meanwhile, the dollar began the week nudging down from multi-year highs, though fears about Europe’s gas supply put a cap on dollar selling.

The greenback has soared this year thanks to a combination of rising US interest rates and wobbling economies in Europe and China.