Photo used for illustrative purpose.

The Pakistani rupee slumped to a record low of Rs298 against the US dollar amid political tumult in the wake of clashes that broke out in the country following the arrests of senior leaders of the Pakistan Tehrik-e-Insaf (PTI), including Imran Khan, media reports said.

The local unit fell Rs8.78, or 3.02 per cent, against the US dollar on Thursday and was trading at Rs299 in the interbank market, Geo News reported.

In the UAE, the Pakistani currency was being exchanged at Rs78.89 against the Dirham for remittances.

In the open market, the US dollar has surpassed the psychological barrier of Rs300 as the greenback was being traded at Rs301.

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Meanwhile, despite no significant change in the international market, gold prices in Pakistan witnessed the highest-ever single-day hike of Rs9,900 and Rs8,487 in one-tola and 10-gram rates, respectively.

All Sindh Saraf Jewellers Association announced that the one-tola and 10-gram of gold hit an all-time high of Rs240,000 and Rs205,761, while the yellow metal rate remained unchanged at $2,031 per ounce on the world markets.

The dollar bonds due 2031 fell to the lowest since November on Thursday and were indicated at 33.10 cents on the dollar.

The new rate is just Re1 away from the much-anticipated rate of Rs300 per dollar, Geo News reported.

The rupee depreciation has piled up foreign debt without taking new external loans, making imports further expensive for Pakistan, which faced a six-decade high inflation reading at 36.4 per cent in April 2023.

Financial pundits believe that the rupee has been depreciating due to political and social unrest caused after the arrest of PTI Chairman Imran Khan, Geo News reported.

Moreover, the dollar demand-supply gap has also widened as the exporters have stopped selling US currency on speculations that rupee would depreciated further versus the greenback. On the other hand, importers are seen rushing to buy dollars.

This gap in the demand and supply of the foreign currency in the interbank market has contributed to the rupee's devaluation.

Khaqan Najeeb, former finance ministry adviser, said that continuing political instability has taken a toll on market sentiments, pushing the Pakistani rupee to hit a record low.

"The heightened political turmoil has come at a time when the economy has been in the doldrums for months, largely due to an acute balance of payment crisis, with falling State Bank of Pakistan reserves barely covering a month of highly controlled imports," he said.

Pakistan is running out of dollars, inflation is going through the roof reaching over 36%, and the crucial International Monetary Fund’s bailout is still in limbo.

The IMF bailout programme, which expires in June, has been stalled since November. Foreign exchange reserves at $4.457 billion could cover barely a month's worth of imports. The country’s economy is on ventilator and needs immediate resuscitation efforts.

The financial assistance from the friendly countries such as China, Saudi Arabia and the United Arab Emirates has yet to materialise fully.

The economic experts are of the view that political stability is must for the economic stability.