In the early hours of Friday, the Pakistani rupee fell below Rs209 versus the US dollar for the first time in the interbank market.
At 10:16 a.m., the dollar was trading at a record low of Rs209.19 against the US dollar, according to a currency dealer.
On Thursday, it finished at Rs207.67.
According to central bank data, the rupee has depreciated by 33 percent (or Rs51) in the past year, compared to Rs157.54 on June 30, 2021.
The currency’s latest plunge comes as the country’s foreign exchange reserves fell to a 34-month low of $9 billion, putting a strain on the country’s worsening balance of international payments issue.
Pakistan has asked the United States for assistance in reviving an IMF loan programme that has been delayed for over a year.
In an interview Syed Atif Zafar, CEO of financial research firm Uraan, said, “The inter-bank market is still not convinced that the IMF will renew its ($6 billion) loan programme for Pakistan.”
The foreign currency inter-bank and stock markets have been anxious due to the uncertainty surrounding the IMF programme. “In the markets, there is no clear-cut situation or direction,” he added.
To address the balance of international payments crisis, the IMF programme must be revived.
“It’s still a 50/50 chance that the IMF programme will be renewed. By the end of June, the situation would be obvious “he insisted.
It’s worth noting that the government has already taken a number of steps in response to the Fund’s instructions. In order for the global lender to restart its programme, it has totally removed subsidies on fuel goods.
The government’s recent actions demonstrate that it is making every effort to resurrect the IMF programme and open up alternative bilateral and multilateral sources of foreign financing as quickly as feasible.
However, the government still needs to take a few steps to resurrect the stalled loan programme, including starting to collect the petroleum development levy (PDL) and general sales tax (GST) on petroleum products, raising income tax rates for salaried people, and increasing gas and electricity tariffs.