The Pakistani rupee continued its free fall against the US dollar on Thursday, breaking through a major psychological barrier by crossing the 200 mark (54.5 against the dirham) for the first time in the country’s history in the interbank market.
The local currency fell 0.81 percent, or Rs1.7, against the US dollar as trading resumed from Wednesday’s close of Rs198.39 and closed at Rs200.
Despite a possible intervention from the State Bank of Pakistan, it remained under pressure throughout the day as market demand was high due to political and economic uncertainty.
The rupee’s downward trend continued on the ninth consecutive working day, losing 6.75 percent, or Rs12.67, since May 9. On May 9, the rupee fell to a new low of Rs187.53 (51.09 against the dirham), before plummeting to Rs190.02 (51.77 against the dirham) on May 11.
The local currency remained under pressure, falling to Rs192.53 (52.46 against the dirham) on May 13, falling below Rs194.19 (52.91 against the dirham) on May 16, falling to Rs198.40 (54.05 against the dirham) on May 18, and ending the week at Rs200.2 (54.55 against the dirham) (May 19).
Pakistan resumed talks with the International Monetary Fund (IMF) in Doha on Thursday to revive a $6 billion extended fund facility, despite a positive development on the economic front.
Analysts and market insiders say the talks with the IMF are critical for restoring investor and other multinational lenders’ confidence, but they are skeptical that the week-long talks will end on a positive note due to the government’s unwillingness to withdraw subsidies on gasoline, gas, and electricity, which is a condition for the IMF to restart the loan program.
The rupee is in free fall against the US dollar and other major currencies, according to Samiullah Tariq, head of research at Pak-Kuwait Investment Company, due to uncertainty over IMF talks that began today in Doha.
The rupee is in free fall against the US dollar and other major currencies, according to Samiullah Tariq, head of research at Pak-Kuwait Investment Company, due to uncertainty over IMF talks that began today in Doha.
“Withdrawal of petroleum product subsidies is an essential part of the IMF talks, and it appears an uphill task to persuade fund officials and get a positive outcome without a firm plan to phase out subsidies on gasoline and electricity,” Tariq said.
