The PKR neared an all-time low against the dollar on Wednesday after falling 74 paise in the interbank market.

The local currency closed at Rs239.65 per dollar — a depreciation of 0.31 per cent from yesterday’s close of Rs238.91. The rupee had reached a record low of 239.94 per dollar on July 28.

Head of Research at Tresmark, Komal Mansoor, said the government was “paralysed by inaction even though we are now in an IMF (International Monetary Fund) programme and can attract forex”.

“Intervention in an illiquid market like Pakistan can have many benefits,” she said.

Mansoor noted that while the dollar’s strength was a serious concern for all economies, the Pakistani rupee was the worst-performing currency in the region.

The dollar hovered near a two-decade peak against a basket of currencies on Wednesday, after yields on United States Treasuries leaped ahead of another aggressive rate hike expected from the US Federal Reserve.

The US dollar index, which measures the greenback against a basket of currencies, was up 0.1pc to 110.27, extending a 0.6pc overnight gain, and remained not far below a 20-year high of 110.79 hit this month.

Seasoned economist Dr Shahid Hasan Siddiqui said the rupee’s value was declining because of smuggling into Afghanistan.

He said that people coming from the neighbouring country stated at the time of crossing over that they had $100,000 for transit trade. However, they had no foreign currency with them and instead, they took $100,000 with them on their way back. This was adding to the pressure on the rupee, he claimed.

He suggested that the government restrict the amount of dollars sold to those leaving Pakistan.

Siddiqui questioned the State Bank of Pakistan’s role and said that instead of only imposing fines, the central bank should order the removal of the president and treasurer of banks that were found to be involved in speculation.

Offering further suggestions, the economist said the licences of exchange companies found to be involved in hawala/hundi should be revoked, underinvoicing by importers and exporters be stopped and unnecessary imports be restricted.

Siddiqui said that while Pakistan could not ban imports under its agreement with the World Trade Organisation, it should convince the international community that it could not allow non-essential imports due to a shortage of foreign currencies.

He recalled that the pressure on the rupee began after the previous Imran Khan-led government “broke off” its agreement with the IMF and the incumbent government delayed negotiating with the lender.

The Pakistani currency has lost about 26pc value against the USD during the current calendar year (CY22).

The dollar has gained 8.12pc against the rupee in the last 12 sessions, 36pc since its CY21 peak on May 14, and 13.9pc since the start of the new fiscal year (FY23).

The government has so far not been able to arrange dollar inflows to improve the country’s foreign exchange reserves, which have been declining each week. The inflow of $1.2 billion from the IMF loan could not encourage other creditors to follow the Fund’s support programme for the economy.

Additional input from Reuters.