KARACHI: Pakistan’s national currency continued its downward trajectory on Wednesday, hitting almost a record all-time low against the US dollar due to a shortage of the greenback and pressure from import payments, financial analysts said. 

According to the State Bank of Pakistan, the rupee depreciated further by 0.31 percent, with the US dollar closing at Rs239.65 against the rupee. On Tuesday, the US dollar closed at Rs238.91 after depreciating by 0.42 percent. 

In July, the Pakistani rupee tumbled to a historic low of Rs239.94 against the greenback owing to pressure from import payments and other factors.

“The rupee is dealing with pressure from a liquidity shortage of US dollars and pressure from import payments,” Samiullah Tariq, head of research at the Pakistan-Kuwait Investment Company, told Arab News. 

Tariq said the greenback’s high interest rates around the world were another reason for the rupee’s depreciation. 

“This is why the rupee has to deal with this pressure, which is constant with other emerging markets,” he added. 

The US dollar reached the highest level in 20 years against a basket of major rival currencies with investors seeking safety as Russia escalates operations over Ukraine.

The Dollar index, which compares the US unit against currencies including the euro, pound and yen, jumped to 110.87 points, also as the Federal Reserve prepares a third successive jumbo rate hike to combat decades-high inflation.

Pakistan’s central bank last week confirmed that the Saudi Fund for Development would extend a $3 billion deposit, currently placed in the State Bank of Pakistan’s (SBP) accounts, for one year, a move that provides breathing space to the South Asian economy to improve its debt profile.

The $3 billion deposit is part of $8.6 billion foreign exchange reserves the South Asian country held till September 9 and which could barely cover 40 days of import payments.

Last month the International Monetary Fund (IMF) board approved the seventh and eighth reviews of Pakistan’s bailout program, allowing for a release of over $1.1 billion to the cash-strapped economy.

Pakistan’s finance minister, Miftah Ismail, last week assured that Pakistan would “absolutely not” default on debt obligations, despite catastrophic floods which have killed over 1,500 people and affected 33 million and submerged a third of the country. 

Pakistani officials have said losses from the flood devastation could go as high as $40 billion.