Pakistani currency continued to plunge for the 14th successive working day, as it crossed Rs202 against the US dollar at one point for the first time in the inter-bank market on Wednesday. The currency maintained its downturn as the country’s default risk, measured by the credit default swap (CDS), remained abnormally high amid growing shortage of foreign currency.
The domestic currency hit an intra-day low of Rs202.49, 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 them from marching on to Islamabad. Later, the rupee partially recovered and closed at Rs201.92, showing a day-today drop of 0.25% as compared to Tuesday’s close at Rs201.41.
“The country’s risk of default has spiked to 15%,” PakKuwait Investment Company Head of Research Samiullah Tariq said while talking to The Express Tribune. “It usually hovers around 3-4% at a time of stability in the economy.” The CDS surged in relation to the abnormal growth in yields on Pakistan’s Eurobonds in the global market.
The yields spiked to 26-27%, indicating the growing worries of global investors about Pakistan’s sovereign bonds. “The rupee will maintain its downturn until the International Monetary Fund (IMF) resumes its $6 billion loan programme,” he said.
Conflicting reports suggest that the IMF would continue to remain engaged with Pakistan for the revival of the multibillion-dollar programme, meaning that the Pakistan-IMF talks in Doha (May 18-25) have ended inconclusively for now and the programme’s revival has been delayed.
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