DUBAI – The Pakistani rupee continued its downward trend, plunging to anall-time low on Monday due to dollar outflow, declining forex reserves andhigh demand for dollar for Haj pilgrimage.

The rupee plunged to 34.85 against the UAE dirham, or 128 against the USdollar, on Monday, becoming the worst performing currency in Asia as theState Bank of Pakistan devalued the rupee for the fourth time in the lastseven months. The currency plunged as low as 5.3 per cent, Khaleej Timeshas reported.

Analysts have predicted that the rupee will continue to weaken in thesecond-half of 2018.

“The main reason for today’s fall was that State Bank of Pakistan had leftrupee to market forces. The central bank is not in a position to supportthe rupee due to poor forex reserve, widening current account deficit andproposed IMF borrowing plan,” said Rajiv Raipancholia, CEO of OrientExchange.

If the trend continues, he predicted that the rupee could slide furtherahead of the upcoming elections.

Raiapancholia expects the rupee will hit 35.50 to 36.00 against the dirhamby 2018-end because the economy is in a very bad shape and the upcomingelections also hint that no party will get absolute majority as well.

*Khaleej Times* had earlier reported that the rupee could hit 34 before theJuly 25 elections due to weakening economy and government finances.

“Falling rupee is a short-term blessing for expats. The decline in currencyis one of the many reasons for high inflation in the country. People inPakistan have to live up to the higher inflation in long term, but this isa boost for expats,” he said.

Sudhesh Giriyan, COO, Xpress Money, expects the rupee will remain underpressure during the second-half of this year and will trade in the range of35 to 38 against the dirham.

“Balance of payment, depleting forex reserves, uncertainty about results ofupcoming elections and high imports are the key reasons for the slide inrupee and these issues will keep the currency under pressure for theremainder of the year,” Giriyan said.

The rupee has plunged 22 per cent from 105 against dollar in December 2017to 128 on July 16, 2018.

The way rupee is trading and events are unfolding, Giriyan sees rupeehitting 38 against the dirham this year is “definitely possible.”

Analysts believe that the government has no option but to approachInternational Monetary Fund for a bailout as the current account deficitcontinues to widen and the dollar reserves have plunged to $9.5 billion,the lowest in more than three and a half years.

Raiapancholia of Orient Exchange said IMF wants Pakistani rupee todepreciate further and settle according to market as a precondition forfurther assistance

Bilal Khan, a senior economist at Standard Chartered Bank, said due tofalling forex reserves Pakistan had approached IMF twice for a bailout andthe government will have to approach IMF again for a bailout.

*Overseas Pakistanis concerned*

Dr Faisel Ikram, president, Pakistan Association, Dubai, suggested that thegovernments in Pakistan should get out of the cycle of obtaining loans fromglobal financial institutions and keep paying interest rates because thedebt will keep mounting and it is not a healthy thing for the economy.

He stressed that persistent slide in the rupee is a concern for all theoverseas Pakistanis because a stable rupee is a sign of healthy economy.

“Falling rupee is a concern for all of us. We all want the economy to grow.Knowing that we have so many challenges, we want a stable government,long-term policies and want public institutions to strengthen,” Ikram said.

Shabbir Merchant, managing director, Champion Neon, echoed Ikram’scomments, saying the rupee’s slide and political instability are not goodfor the country.

But Merchant hoped that China-Pakistan Economic Corridor (CPEC) willimprove the country’s economy.

“Being a businessman, I believe things will improve in the country as aresults of CPEC and investments will increase into the country.”

He advised the upcoming government after the July 25 elections to give morebenefits to overseas Pakistanis and business community to attract moreforeign direct investment into the country.