As the government relaxed the FX cap to persuade the International Monetary Fund (IMF) to a loan tranche, the Pakistani rupee continued its downward trend on Friday, falling over Rs12 against the US dollar in the interbank market.
On Thursday’s interbank market closed at Rs255.43, and the open market was trading at Rs268.30.
Key demand of the IMF as part of a bailout program agreed upon in 2018 has been met, as the dollar has increased by Rs30.41 on the interbank market since Thursday.
According to the rates provided by the ECAP, the rupee dropped to 265 to the dollar in the open market, a decrease of Rs3 from the previous day.
A market-driven exchange rate is one of the key conditions the IMF has set for resuming the stalled bailout program.
Ishaq Dar, the finance minister, has defended the rupee on IMF review since his appointment in September.
A day earlier, the interbank market saw the rupee lose 24 points 11 and drop as low as 255 points 43 to the dollar. The 9-point-six percent decline ranks as the second-largest drop in a single session.
The previous record-low of 239.94 rupees was set on July 28, 2022, when Pakistan’s already-fragile economy was further harmed by political unrest and catastrophic floods.
With less than three weeks’ worth of import coverage in its foreign exchange reserves, which decreased $923 million to $3.68 billion in the most recent data, Pakistan is in dire need of external financing due to a severe balance of payments crisis.
In 2019, Pakistan received a $6 billion bailout from the IMF. A further $1 billion was added to it last year to assist the nation in recovering from devastating floods. Still, the IMF suspended payments in November due to Pakistan’s failure to make further progress with fiscal consolidation.
