The Pakistani rupee fell 9.6% against the dollar on Thursday, central bank data showed — the biggest one-day drop in over two decades — in a slump that may persuade the International Monetary Fund to resume lending to The country.
It comes just days after foreign exchange companies lifted a cap from the exchange rate. This was an important demand of IMF as Part of A program of The South Asian country, which is cash strapped, has agreed to economic reforms.
The currency’s official value closed at 255.4 rupees against the dollar versus 230.9 on Wednesday, the central bank said.
Finding an acute balance of Pakistan in desperate payments crisis to secure external financing, with less than three weeks’ worth of Its import coverage in its foreign reserves fell to $923 million to The latest data show that $3.68 Billion was spent.
In 2019, Pakistan was able to secure a $6 billion IMF bailout. This was further augmented by another $1 billion in the last year to After the devastating flooding, the IMF stopped disbursements to the country in November. to Pakistan’s failure to Make more progress in fiscal consolidation
Thursday’s announcement by the lender was that they were sending a mission to The country at the finish of January to Discuss the possibility of resuming your program.
Other than wanting government to Take fiscal measures. The IMF encourages it to Move to The IMF stressed Thursday that a market-determined exchange rates regime was possible.
On Wednesday, foreign exchange firms announced that the cap had been removed for their own sake. of Because it caused “artificial” These distortions can have a negative impact on the economy.
Wednesday’s move by foreign currency dealers, whose open market rates are different from the rate notified by the central bank, had a cascade effect on official exchange rates on Thursday.
According to the Reuters, the drop in official rates was both in percentage and absolute terms the largest since 1999. to JS Global Pakistani A brokerage house.
The open market is the place to be. rupee Weakened from 243 Rs to The dollar to 262, an increase of According to our estimates, the stock market is down 1.2% from yesterday’s loss of 7%. to The Exchange Companies Association of Pakistan (ECAP) trade data.
“We requested the central bank to increase the interbank (rate) to help combat the black market,” Malik Bostan is the President ECAP.
The State Bank of Pakistan (SBP) was not contacted by the finance ministry. to A Reuters request for comments.
Ishaq Dar, Finance Minister to Protect the rupee His September election, which included reported currency market interventions had led to a series of counter-productive events. to the IMF’s advice.
But, Pakistan Stock Exchange responded positively to The rupee’s fall, with the KSE 100 index shooting up more than 1,000 points, or 2.5%.
“The depreciation in the rupee takes away some uncertainty regarding the economic roadmap ahead and resumption of the IMF program, which the market is responding positively to,” Tahir Abbass is head of Arif Habib Limited conducted research.
Topline Securities in Karachi, an international brokerage, reported the dramatic fall in foreign reserves to $8 billion as of September to $4.6 Billion as of January 13th, led to The spread between open and official market rates has increased, creating a black market in dollars. to The low supply
Banks were hard hit by the sudden fall in interest rates. The following is an analysis to Two officials from Pakistani commercial banks, which had previously borrowed at 230 Rupees. to The dollar to You can make payment by opening up positions right now to Pay your bills at a fixed rate of 250 rupees.
Reuters was informed by officials about the condition. of anonymity. The most severely hit banks were the ones that didn’t have sufficient dollar inflows.
Moving increases your chances of A restart of IMF financing would help Pakistan. However, Pakistan continues to reel from decades-high inflation that economists worry will worsen. Most of Pakistan’s critical imports, including fuel, are paid for in dollars.
“It will give a significant impetus to already elevated price pressures in the economy,” Sakib Sherani: Pakistani macroeconomist adds that the consumer price index numbers (CPI), are headed to Levels previously unimaginable in this country.
The first half of The average inflation rate for the current fiscal year ended in June and is currently at 25%. With key rates at their highest levels in decades and economic growth having increased, the central bank is tightening its monetary policy. to It was a grinding stop.
The government will be under increasing political pressure due to the economic crisis. Imran Khan, former prime minister demanded a general election.
