The Pakistani rupee fell to an all-time low of 255 in relation to the US dollar.
The decline occurs as a result of the government’s decision to give up its control over the rupee-dollar exchange rate in accordance with an IMF condition.
On Thursday around 1 pm, the Pakistani currency plummeted to an all-time low of Rs255 versus the US dollar on the interbank market in Karachi. This marked a drop of Rs24.11, or 9.45%, from its previous value.
The most recent decline occurred after the government gave up its control over the rupee-dollar exchange rate in order to comply with a condition imposed by the International Monetary Fund (IMF).
According to the data provided by the State Bank of Pakistan, the value of the national currency ended the previous day at Rs230.89 for every dollar (SBP). The depreciation of the rupee, on the other hand, contributed to a 1,200-point gain on the Pakistan Stock Exchange (PSX) during the course of the day.
In anticipation of the restart of the $7 billion loan programme offered by the International Monetary Fund (IMF), financial analysts have forecasted that the local currency may suffer a loss of up to Rs250-260 versus the US dollar.
Earlier, the Fund requested that the government hand over control of the foreign exchange rate determination to the market forces, which are primarily commercial banks. This was one of four fundamental conditions that needed to be met before the IMF programme could be restarted.
Ever since Ishaq Dar took over as finance minister toward the end of September 2022, the government has maintained its monopoly on the control of the rupee. At that time, Dar had stated that the correct exchange rate for the rupee is somewhere in the region of 180–200 rupees to one dollar.
The Minister of Finance was of the opinion that the local currency had been unfairly devalued by market forces to Rs240/USD for the first time in July 2022 and for the second time in September 2022.
As a result, the central bank decided to investigate the banks and came to the conclusion that 13 of the banks were responsible. At the beginning of this month, the SBP announced that it intends to take legal action against the banks in the days to come.
In the meantime, Pakistan gave an assurance to the United States on Wednesday that it would continue to be committed to the IMF programme, despite the fact that the country’s reserves had dropped to just enough to cover imports for half a month after making a new debt repayment of $500 million.
The International Monetary Fund has requested that Pakistan adopt a market-based exchange rate, loosen restrictions placed on imports, and raise the prices of taxes and electricity. The government, on the other hand, has not implemented any of these actions as of yet and is waiting for a formal engagement with the international lender before beginning any of these procedures.
A payment of 500 million U.S. dollars was made by Pakistan to a Chinese commercial bank. As a result, Pakistan’s reserves have decreased to a level that cannot be described as comfortable according to any standard.
