The rupee on Friday plunged to a historic low against the dollar after Prime Minister Shehbaz Sharif’s said that the International Monetary Fund (IMF) is giving Pakistan “a tough time” — as the lender wants the government to do more on the economic front.
“As we speak, an IMF delegation is in Islamabad [holding parleys on loan programme] and giving a very tough time to the finance minister and his team,” the prime minister said while speaking at the apex committee meeting in Peshawar, and termed the economic challenges “unimaginable”.
At the day’s close, the rupee plunged to Rs276.58, according to the State Bank of Pakistan (SBP), after losing Rs5.22 or 1.89% of its value. Meanwhile, the local currency closed at 283 in the open market.
Analysts have stressed that the country needs the Washington-based lender’s bailout programme to avoid default — a threat that has been looming over Islamabad for some months now.
AA Commodities Director Adnan Agar said that the rupee’s downward spiral is expected till Pakistan secures a staff-level agreement with the Washington-based lender.
The analyst said that the market is reacting to the reports coming on the demands being put forward by the IMF to the government.
Agar warned that if the government fails to secure a staff-level agreement with the Fund, then the rupee will incur further losses.
“If the IMF deal is done timely then it would appreciate but not that much,” said Agar.
In a bid to curb the black market and meet IMF demands, the government and exchange companies removed the dollar cap — imposed to stabilise the dollar’s value.
But that did not have a substantial effect on the local currency as the investors remain wary due to a surge in terrorism and the decline in State Bank of Pakistan-held foreign exchange reserves — which now stand at just $3.08 billion and will provide an import cover of 18.5 days.
