The rupee continues to explore new records against the US dollar, stakeholders are now concerned about the maximum that the local unit will fall before holding its ground, rupee may slump to 350 per dollar in June.
Economists are warning a massive drop in rupee, as the political disruptions and economic downfall is triggering the situation more. Some analysts also forecast another 20% decline in rupee.
Economists predicts the downfall keeping in view the clash between coalition government and Pakistan Tehreek e Insaf Chairman Imran Khan if the International Monetary Fund (IMF) chooses not to provide loans.
The Chief Executive Officer at Premier Financial Services Pvt in in Karachi Adil Ghaffar said that the rupee may slump to as low as 350 per dollar in June if Pakistan fails to secure the loan.
An another economist in Karachi said, “The rupee trajectory remains subject to considerable uncertainty as market sentiment is fragile”. Political conflicts will remain also a key risk in the near-term until the elections.
The stakeholders of country are also concerned that the weakening currency could open up Pakistanis to a new round of inflationary impact, which will hit the lower and middle classes the hardest.
Politics and financial Downfall
The leadership of Pakistan has been unstable since Pakistan Tehreek e Insaf chairman Imran Khan was ousted as the Prime Minister via a no-confidence motion vote in April last year. Latest arrest fo Imran Khan also caused the face-off between him and government causing more downfall of country.
The bond investors in country are also nervous about the situation demanding extra yield to hold Pakistan’s dollar bonds over US treasuries climbing above 35% points to a record this month.