The deterioration of Pakistan’s rupee continued against the US dollar for the third successive day as the currency closed near 173 in the inter-bank market on Wednesday.

As per the State Bank of Pakistan (SBP), the PKR settled at 172.93 against the USD after a day-on-day depreciation of Rs1.3 or 0.75%. On Tuesday, the PKR had dropped to 171.63 against the USD.

The rupee has lost nearly 8% of its value against the US dollar calendar-year-to-date, but almost 12% since its recent high achieved on May 7.

“The latest data on foreign exchange reserves has irked investors,” Saad Khan, Head of Equities at IGI Securities, told Business Recorder, after reserves in October declined by over $2 billion on a monthly basis.

Data shows overall reserves held by Pakistan amounted to $23.93 billion, as compared to $25.98 billion in September.

“Delay in announcement of the International Monetary Fund (IMF) programme has also dented sentiment,” said Khan.

Fall continues: Pakistan's rupee weakens sharply against US dollar

The market is eagerly waiting for the IMF announcement, under which Pakistan would receive $1 billion.

Khan also said that the market expects the inflation rate to increase in the coming months, owing to a hike in the prices of petroleum products and food items. “Inflation rate could rise up to 10%, which could add pressure on the policy rate, and the market expects interest rate to increase by 75-100 bps.”

On the other hand, Asad Rizvi, ex Treasury Head Chase Manhattan Bank, said that the delay is causing unrest in the market.

“After PM's Saudi visit, it was expected that the loan would be credited in the SBP account and simultaneously the stalled IMF loan program would resume,” Rizvi tweeted. However, despite tough measures and reforms, “the delay is causing unrest,” he said.

This article first appeared in Business Recorder on Nov 10, 2021.