KARACHI: The Pakistan rupee on Wednesday continued to trade at historic lows against the United State Dollar (USD) as 2021 draws to a close amid higher imports, analysts and traders said, projecting a less pessimistic outlook for the new year.
The rupee started the year at Rs160.39 in January this year compared to the greenback and closed at Rs178.24 on Wednesday in the interbank market, another historic low, recording a devaluation of over 11 percent or Rs17.85 since January 2021.
The currency appreciated to Rs152.39 against the greenback in May this year but in the latter half of the year higher imports, a Taliban takeover in Afghanistan and negotiations with the International Monetary Fund contributed to the rupee’s downslide, which lost value by around 17 percent or Rs25.85.
“Increasing CAD (current account deficit) due to higher imports coupled with rising international commodity prices and freight charges, uncertainty related to the IMF [loan] program and speculation led to the rupee’s depreciation,” Sana Tawfik, a banking sector analyst at Arif Habib Limited, told Arab News.
Pakistan’s current account deficit widened to a 40-month high at $1.91 billion in November 2021. The July-Nov current account balance turned into a $7 billion deficit as compared to a $1.8 billion surplus recorded last year, according to data released by the central bank.
Five month imports of the country stood at $29.9 billion as compared to exports of $12.3 billion, posting a trade deficit of $17.6 billion.
The higher demand for the greenback for import payments amid increasing global commodity prices, including of petroleum products and food items, kept the Pakistani rupee under pressure while the change of regime in Afghanistan compounded the situation as the flight of the dollar started from Pakistan to Afghanistan.
The Taliban took control of Kabul on August 15, 2021, after US forces withdrew from Afghanistan, leaving behind battered financial institutions. The situation took a turn for the worst after all official accounts of the Afghan government abroad were frozen.
“Afghanistan still depends on Pakistan for its import payments. Every month $300-$400 million worth of Afghanistan’s import are met through Pakistan due to bilateral trade in Pak rupee,” Malik Bostan, chairman of the Exchange Companies Association of Pakistan (ECAP), told Arab News. “Pakistan will be better off if the accounts of Afghanistan are unfrozen because there will be no pressure on Pak rupee.”
But Pakistani currency analysts expect rupee depreciation to slow down following international inflows during the first half of the next year.
“Over the next few quarters our foreign exchange outlook is less pessimistic,” Tawfik, said. “Am expecting the Pak rupee to remain within the range of 178-180 per USD till June 2022 with inflows expected from International Sukuk and IMF tranche followed by flows from ADB and World Bank.”
The south Asian country is expected to see a $6 billion IMF loan program revived at the next meeting of the fund’s executive board on January 12, 2022, which will also ease pressure on the Pakistan rupee.
Pakistan rupee continues slide to historic lows against greenback as 2021 draws to close
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Pakistan rupee continues slide to historic lows against greenback as 2021 draws to close
- Rupee was at Rs160.39 in January compared to greenback and closed at Rs178.24 on Wednesday in interbank market
- Change of regime in Afghanistan compounded the situation as flight of the dollar started to Afghanistan from Pakistan
Pakistan, Iraq agree on tighter coordination over pilgrims under new regulated travel system
- New system requires all Iraq-Iran pilgrimages to be organized by licensed groups under state oversight
- Long-running “Salar” model relied on informal caravan leaders, leading to overstays and missing pilgrims
ISLAMABAD: Pakistan and Iraq this week agreed to closely coordinate on the management and security of Pakistani pilgrims, as Islamabad rolls out a new, tightly regulated travel system aimed at preventing overstays, undocumented migration and security breaches during religious visits to Iraq and Iran.
The understanding was reached during a meeting between Pakistan’s Interior and Narcotics Control Minister Mohsin Naqvi and Iraq’s Interior Minister General Abdul Amir Al-Shammari on Thursday evening, where both sides discussed measures to facilitate pilgrims while strengthening oversight, Pakistan’s interior ministry said.
The agreement comes as Pakistan dismantles its decades-old pilgrim travel model and replaces it with a centralized, licensed system after authorities confirmed that tens of thousands of Pakistani pilgrims had overstayed or gone missing abroad over the past decade, triggering concerns from host governments.
“You have, for the first time during your tenure, taken effective measures to organize pilgrim groups, which are commendable,” Al-Shammari told Naqvi, according to Pakistan’s interior ministry.
“All pilgrims included in the list provided by Pakistan’s Ministry of Interior will be allowed to enter Iraq,” he added, making clear that only travelers cleared under the new system would be permitted.
Naqvi said Pakistan would strictly enforce return timelines under the revised framework.
“Pilgrims traveling to Iraq will not be allowed to stay beyond the designated period,” he said, adding that relevant authorities in both countries would remain in close coordination.
Both interior ministers also agreed to strengthen information-sharing and joint mechanisms on security cooperation, counterterrorism and the prevention of human smuggling, officials said.
“The safety, dignity, and facilitation of Pakistani pilgrims is the top priority of the Government of Pakistan,” Naqvi said.
Al-Shammari said he would visit Pakistan soon to finalize a joint roadmap to further improve pilgrim facilitation, security coordination and broader bilateral cooperation, according to the interior ministry.
Pakistan’s government has overhauled its pilgrim travel regime this year, abolishing the long-running “Salar” system under which informal caravan leaders managed pilgrimages. The move followed official confirmation that around 40,000 Pakistani pilgrims had overstayed or disappeared in Iran, Iraq and Syria over the past ten years.
Under the new Ziyarat Management Policy, only licensed Ziyarat Group Organizers (ZGOs) are allowed to arrange pilgrimages, with companies held directly responsible for ensuring pilgrims return on time. Authorities have completed security clearance for 585 companies seeking registration, while scrutiny of applications remains ongoing.
Islamabad has also barred overland travel for major pilgrimages, including Arbaeen, citing security risks in Pakistan’s southwestern Balochistan province, meaning all travel to Iraq and Iran is now restricted to regulated air routes.
Tens of thousands of Pakistani pilgrims travel each year to Iraq and Iran to visit some of the most revered shrines in Shia Islam, including the mausoleums of Imam Ali in Najaf and Imam Hussain in Karbala in Iraq, and major religious sites in Mashhad and Qom in Iran. Pilgrimages peak during religious occasions such as Arbaeen, when millions of worshippers converge on Karbala from across the region. The scale of travel, often involving long stays and cross-border movements, has long posed logistical, security and migration-management challenges for Pakistani authorities and host governments alike.
