Rupee slides to 202 as uncertainty plagues markets

The Pakistani rupee hit a new all-time low on Wednesday, reaching Rs202 against the US dollar for the first time in inter-bank market.

The country's capital markets continued to plunge as the ousted Pakistan Tehreek-e-Insaf (PTI) began its long march to the federal capital amid the coalition government's crackdown on party workers and leaders in an attempt to stop the party from marching on to Islamabad.

Rupee slumped Rs1.08 to a historic low of Rs202.49 against the greenback just before noon, cumulatively losing over Rs16 against greenback in the past 14 working days.

The Pakistan Stock Exchange sank 1.22% (or 513 points) to a one-year low, at 41,438 points at noon as well.

According to experts, political uncertainty was indicative of economic turmoil in Pakistan. Bloomberg also reported that the threat of default was fast approaching Pakistan as the political crisis continued to deepen.

The report came ahead of a likely inconclusive end to talks between the government and the International Monetary Fund (IMF). The government had been hoping for revival of the $6 billion loan programme during negotiations in Doha.

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Earlier, State Bank of Pakistan (SBP) acting governor Dr Murtaza Syed had hinted at a possible delay in Doha talks by “a few days or weeks”.

Pakistan badly needs the IMF loan programme to increase its capacity to make international payments and avert the elevated risk of default on global payments.

The global lender had conditioned the revival of the loan programme with the withdrawal of subsidiaries on petroleum products and electricity.

Two days ago, finance Minister Miftah Ismail had ruled out passing on the increase in international energy prices to the public. The action would have increased inflation, reaching a high of or over 15% in the country.

The news came as Pakistan's foreign exchange reserves depleted to a critically low level of six-week import cover, at $10.1 billion.

Islamabad is estimated to record a net outflow of over $7 billion from the reserves in May and June, as it is scheduled to repay maturing global bonds worth $4.5 billion and another $3 billion to finance current account deficit by end of June 2022.