"Today, the rupee was trading at 133.10 against the dollar, or 36.51 against the riyal, during early morning hours. It can fall to 135 against the dollar, or 36.90 against the riyal, in the coming days as the IMF feels the rupee is still overvalued and could further depreciate to 145 against the dollar and 39.80 against the riyal," he said.
Sudhesh Giriyan, COO, Xpress Money, also attributed the decline in the rupee to various reasons such as the country's widening current account deficit and deteriorating foreign currency reserves.
"From an economic point of view, this situation can lead to inflation and rise in fuel prices in the country. However, Pakistani expats can greatly benefit from better exchange rates. We have seen a surge in remittances each time the currency has devalued as expats get more value on their money transfers," Giriyan said.
Though the media in Pakistan has reported that Islamabad will seek an $8 billion loan from the IMF but the Institute of International Finance (IIF) on Friday said the bailout could top $15 billion due to $5 billion roll-over debt and maturity of $1 billion sukuk in March next year.
Islamabad is trying to stabilise the economy as it battles the balance of payments crisis amid a shortage of dollars and dwindling foreign currency reserves. Analysts expect these challenges will keep the currency under pressure in the coming weeks and the rupee could touch 40 against the riyal in the near future.
On Monday, the Pakistan stock exchange plunged more than three per cent, or nearly 1,100 points, in early trade and hit a 2-year low but recovered later to close the day at 36,767 points, a decline of two per cent, or 750 points. The market has lost nearly 10 per cent since October 1.
Commenting on volatility in the equity market, Raipancholia said it was uncertainty driven panic that triggered the October 8 stock market crash in which the KSE-100 Index fell 1,328 points, the biggest one-day decline in the last 15 months. Since there is no change in circumstances, the equity fall is likely to continue. -
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