KARACHI: The Pakistani rupee on Thursday touched the historic low of 298.93 against the US dollar in the interbank market due to the political unrest in the country.
The State Bank of Pakistan confirmed the free fall of rupee saying that the rupee dropped by 3% or Rs8.71 against the US dollar.
The dollar bonds due 2031 also fell to the lowest since November on Thursday, with indications at 33.10 cents on the dollar. This new rate is just Re1 away from the much-anticipated rate of Rs300 per dollar. The financial experts said that the political and social unrest was the main reason behind the depreciation of the rupee.
The foreign debt, after the free fall of the rupee, increased without taking new external loans and made the imports even more expensive for Pakistan. Additionally, the country faced a six-decade high inflation rate of 36.4% in April 2023, exacerbating the impact of the rupee’s depreciation.
Earlier in the day, the International Monetary Fund’s (IMF) expressed confidence in the economy of Pakistan gave assurance about its engagement with Pakistan for its loan proagramme. The assurance from the IMF provided clarity to investors which backed the Pakistan Stock Exchange (PSX) despite economic uncertainties and the rupee’s decline.
As of 2:09 pm, the benchmark KSE-100 was trading at 41,224.31 points, up by 149.36 points (or 0.36%). The index had earlier gained 1%, the highest since April 20, following the IMF’s announcement.
Despite concerns that the current political situation would hinder the revival of the bailout programme, the IMF spokesperson stated that the Fund sees no indication of Pakistan wanting to pause negotiations on disbursement from the current programme.
The IMF is working towards securing funding and policy assurances to reach an agreement on the ninth review of the $6.7 billion loan agreed in 2019.
