KARACHI: Following the latest drop of Rs0.92 on Tuesday, the local currency has depreciated a total Rs9.23 to an all-time low at Rs167.9 against the US dollar since a lockdown was imposed two weeks ago in Pakistan.
The research houses have anticipated the rupee devaluing to Rs170-175 by June 30, 2020, as the country may face some international payment pressure on the counters including foreign debt repayment and foreigners pulling-out short-term investment from domestic debt and stock markets.
Foreigners have so far withdrawn over $2 billion, mostly since the mid of March, from debt market out of the total $3.49 billion invested over the prior eight months (July 2019 to February 2020) besides a divestment of $500 million from the local stock market. “They (foreign investors) are withdrawing the investment from markets across the world to keep cash in hands to cope in the unprecedented circumstances of pandemic and lockdowns around the globe,” State Bank of Pakistan (SBP) Governor Reza Baqir said the other day.
Topline Research anticipated the balance of payments problems over the next 3-12 months (even though current account balance will be more than manageable), if Pakistan is unable to muster reasonable support of the IMF, multilateral agencies and friendly countries.
“We believe Pakistan will renegotiate IMF loan programme due to the extraordinary circumstances owing to the outbreak of COVID-19,” it said.
As a result of the balance of payments issues, “we have revised our rupee/US dollar assumption for June-2020 to Rs170 (from Rs158) and for June 2021 to Rs180 (from Rs165).”
“We expect SBP reserves to fall to $8 billion by Jun-2020 (compared to over $11 billion now), if none of the… (foreign) support materialises, as debt repayments over the next there months stand at around $4 billion,” it said.
