The Pakistani rupee hit an all-time low against the US dollar and the UAE dirham on Tuesday due to political uncertainty and judicial crisis, prompting the South Asian country’s central bank to hike interest rates by 100 basis points.

Data on xe.com showed the rupee plummeting to a record low of 288 against the US dollar (78.47 against the UAE dirham) on Tuesday evening.

However, the rupee settled at 287.29 against the greenback, falling more than two per cent in a day.

Pakistan’s Supreme Court on Tuesday ordered the Election Commission to hold elections in Punjab on May 14 and termed its decision to postpone polls as “unconstitutional.”

After the political crisis between the government and the opposition, the South Asian country is currently navigating through the judicial storm.

In addition, the dwindling foreign exchange reserves are also keeping the rupee under pressure. As of mid-March, SBP’s forex reserves stood at $4.31 billion.

Analysts expect that if the current turmoil is not settled, the rupee could hit 300 against the US dollar in the near term. The Asian currency was selling for 291 in the open market (79.29 versus the UAE dirham).

To rein in raging inflation which has surpassed 35 per cent, the State Bank of Pakistan on Tuesday hiked interest rates by 100 basis points to record 21 per cent.

The Bank on Tuesday said it considered the current monetary policy stance appropriate, and stressed that the rate hike, along with previous accumulated monetary tightening, will help achieve the medium-term inflation target over the next eight quarters.

“However, the Monetary Policy Committee noted that uncertainties attached to the global financial conditions as well as the domestic political situation pose risks to this assessment,” the apex bank said.

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