The Pakistani rupee plunged by Rs 18.97 against the dollar in the interbank trading on Thursday and closed at Rs 285.08 against the previous day’s closing of Rs 266.11.
According to the Forex Association of Pakistan (FAP), the buying and selling rates of dollars in the open market were recorded at Rs 287 and Rs 289 respectively. The price of the Euro increased by Rs 20.02 and closed at Rs 303.10 against the last day’s closing of Rs 283.08, according to the State Bank of Pakistan (SBP). The Japanese Yen gained 13 paisa to close at Rs 2.08, whereas an increase of Rs 19.74 was witnessed in the exchange rate of the British Pound, which was traded at Rs 341.26 as compared to its last day’s closing of Rs 321.52.
The exchange rates of the Emirates Dirham and Saudi Riyal increased by Rs 5.16 and Rs 5.06 to close at Rs 77.61 and Rs 75.96 respectively. ECAP general secretary Zafar Paracha told a private TV channel the main concern in the market was the delay in the agreement with IMF. However, the lender’s condition to peg the currency rate with that of the grey market – also referred to as the Peshawar market – had triggered uncertainty.
Paracha said, in his view, the current rate was too high and shouldn’t have risen that much. He added that in the grey market, the greenback was trading at Rs290 a day ago.
Meanwhile, currency market expert Adnan Asghar said the currency had been sliding after delays in a deal between Pakistan and the IMF. He said the country was “nearing a default situation” owing to this delay. “Uncertain political situation remained another factor behind the rupee’s depreciation,” he added.
Pakistan Tehreek-e-Insaf (PTI) Chairman Imran Khan slammed the government for slaughtering the rupee. “Rupee slaughtered – lost over 62% or 110/$ in 11 months of PDM.
This has increased public debt alone Rs 14.3 trillion and historic 75-year high inflation 31.5%,” noted the former prime minister. The PTI chief alleged that the country was “paying heavy price of regime change conspiracy where a bunch of criminals” were “foisted upon nation” by former army chief. Pakistani authorities have been negotiating with the IMF since early February over policy framework issues and are hoping to sign a staff-level agreement that will pave the way for more inflows from other bilateral and multilateral lenders.
Once the deal is signed, the lender will disburse a tranche of more than $1 billion from the $6.5 billion bailout agreed to in 2019. Pakistan has already taken a string of measures, including adopting a market-based exchange rate; a hike in fuel and power tariffs; the withdrawal of subsidies, and more taxation to generate revenue to bridge the fiscal deficit. Officials say the lender is still negotiating with Islamabad over power sector debt, as well as a potential rise in the policy rate, which currently stands at 17%.
The strict measures are likely to further cool the economy and stoke inflation, which stood at 31.55% in February. The South Asian country’s economy has been in turmoil, and desperately needs external financing, with its foreign exchange reserves dipping to around $3 billion, barely enough for three weeks’ worth of imports.
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