Pakistani rupee crashes to record low against US dollar amid political uncertainty sparked by Punjab by-poll

The Pakistani rupee crashed to a record low against the US dollar on Monday following the political uncertainty after Imran Khan's Pakistan Tehreek-e-Insaf party routed the ruling Pakistan Muslim League-Nawaz party in the crucial Punjab assembly by-polls.

The development was dealing a major blow to Prime Minister Shehbaz Sharif whose son Hamza Shehbaz is all set to lose his post as chief minister.

Apart from the Pakistani rupee crash which was trading at an all time high at Rs 215 in the inter banking trading, the benchmark KSE (Karachi Stock Exchange)-100 index also plunged by more than 700 points during intraday trade.

Also Read | Pakistani Hindu refugees in Delhi's Majnu-ka-Tila lack basic facilities like water, electricity

All financial analysts said the political uncertainty had led to the slide in the forex and stock exchange trading.

The rupee lost massive ground to the US dollar losing 4.3 rupees by midday in interbank trade.

The dollar was trading at an all time high of 215.25 rupees after it had closed at 210.95 last week.

Also Read | ISJK takes a dig at Pakistani spy agency ISI over Lal Bazar terror attack

Faisal Nawaz, a financial analyst at Topline securities, said that the political uncertainty arising out of the outcome of the Punjab by-polls a day earlier had created the uncertain situation.

"Business is hurting because no one is certain what happens now and how long the central government will last,” he said.

Former PM Imran Khan’s PTI bagged 15 seats in the Punjab Assembly by-polls with the ruling PML-N getting just four seats with one going to an independent.

Also Read | IMF reaches staff-level agreement to release $1.17 bn in funds for Pakistan

The seats for PTI mean that it is in a position to form its govermment in Punjab with the help of its main ally, Pakistan Muslim League (Q).

Political analysts also believe the Punjab results could hasten a decision to have early general elections in the country.

The day saw stocks plunge by more than 600 points shortly after trading began and lost 713.19 points against the previous day's close of 42,074.91 to reach 41,361.72 by 12:39 pm.

Also Read | BJP uses photo to back its claim of Ansari's connection with Pak journalist spying for ISI

After reaching a peak of 211.93 on June 22, the dollar started declining for a brief period and fell to a low of 204.56 on July 4.

The strength which was gained apparently by a $2.3 billion inflow from China and positive news about IMF resuming its fund to Pakistan appeared to have evaporated after the by-election results.

“There is concern about whether the Shehbaz Sharif led government will now last out at the centre,” Faisal said.

Also Read | Sri Lanka, Pakistan are in crisis. India must step up to help them

“It is going to be a very interesting week and I think the Central Bank will have to step in,” he added.

Zafar Paracha, the General Secretary of the Exchange Companies Association of Pakistan, said the dollar was also rising because foreign investors were reluctant to invest in the country because they had “no idea” how high the dollar would rise, while the growth rate of remittances had dropped because overseas Pakistanis were “unhappy”.

The Punjab by-election results also indicate that the voters were not happy with the unpopular economic decisions of the PML-N as it allowed the inflationary trend to continue in the country apparently to ward off an economic meltdown.