Pakistan’s rupee continued to take a massive hammering at the hands of the US dollar in the inter-bank market on Tuesday, hitting 224 in intra-day trading amid renewed political uncertainty that has wrecked market confidence and given “speculators” additional fodder.

At around 2:20pm, the rupee was being quoted at 224, a massive depreciation of Rs8.8 or nearly 4% against the greenback.

The rupee is on track for its biggest fall on a day-to-day basis. A final closing level will be published by the State Bank of Pakistan (SBP) after market closes.

Reports indicate heavy import payments and renewed political uncertainty are reasons behind the massive fall. Additionally, Fitch Ratings’ downgrade of Pakistan’s outlook has only added to the pressure.

On Monday, the rupee had closed at the then-record low of 215.2 after depreciating nearly 2% against the US dollar in the inter-bank market as political uncertainty after Punjab by-polls threw the market into a frenzy.

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.

“The political storm in the making has disturbed policy continuity,” Wajid Rizvi, Head of Research at Intermarket Securities, told Business Recorder.

“This has led to speculative behaviour regarding the International Monetary Fund (IMF) programme,” he said.

Compounding uncertainty is the downgrade of Pakistan’s outlook by Moody’s last month and Fitch today, said Rizvi.

Fitch Ratings agency on Tuesday downgraded Pakistan’s outlook from stable to negative in view of the significant deterioration in the country’s external liquidity position and financing conditions since early 2022.

Fitch saw considerable risks to the implementation of the IMF programme and to continued access of Pakistan to financing after the programme’s expiry in June 2023 in a tough economic and political climate.

“Despite the recovery in remittances, things are not looking good with regards to the political climate,” said Rizvi. “Considering elections could be around the corner, the government is more likely to pursue popular measures, while fiscal consolidation would not be given preference,” he said.

Meanwhile, Samiullah Tariq, Head of Research at Pakistan Kuwait Investment Company, added that the payment pressure amid oil imports and ongoing political uncertainty is leading to the rupee’s decline.

This is an intra-day update