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Monday, September 25, 2023

Pakistani rupee drops further, hits new low against UAE dirham

The Pakistani rupee hit a record low due to increased dollar demand, high inflation, and political uncertainty. Interbank and open market rates also widened, adding pressure to the currency. Against the UAE dirham, the rupee dropped to 82.2, and the open market rate reached 85.3.

The rupee broke the 300 barrier against the US dollar after import restrictions were eased, boosting dollar demand.

As of August 18, Pakistan’s foreign reserves were at $13.25 billion. The IMF approved a 9-month, $3 billion loan to support the economy, with additional funds from Saudi Arabia ($2 billion) and the UAE ($1 billion).

The Institute of International Finance projected the rupee to drop further to 317.1 against the dollar (86.4 against the UAE dirham) in 2024-25. Analysts believe this could happen sooner if the economy weakens and a fragile government takes over after upcoming elections.

The IIF expects minimal GDP growth for Pakistan: 0.3% for 2022-23, 3.0% for 2023-24, and 4.2% for 2024-25, with concerns about financing in the post-election period.

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