KARACHI: The Pakistan rupee dropped to a historic low of 191 rupees to the dollar Thursday as an ongoing political crisis rocked confidence in the currency.
The rupee has been declining for months, but the fall became precipitous in March when opposition parties tabled a no-confidence motion against Prime Minister Imran Khan that led to the dissolution of the national assembly last week.
The rupee has lost over six percent in a month, and on the open market Thursday was at 191 and 189 at the interbank rate.
"The political mess has ensued from uncertainty and this badly reflects on the rupee," said Mohammad Sohail, chief of Topline Securities, a Karachi based brokerage and economic research house.
Pakistan's supreme court was sitting Thursday to rule on the legality of political manoeuvres that led Khan to dissolve the national assembly. Pakistan's foreign exchange reserves, which rely on remittances from the diaspora, have failed to stop a growing trade deficit.
Reserves have fallen to $12 billion from $16 billion since March as the deficit hit 70 percent for the nine months of the fiscal year spanning 2021-22.
Since July 2021, the rupee has lost 18 percent of its value against the dollar. Relations with the United States and International Monetary Fund (IMF) are also critical factors. The IMF has approved a $6 billion bailout package for Pakistan to support its balance of payment issue in 2019. Half was disbursed, but the rest is being renegotiated.