Amid tough IMF talks, rupee hits new low

Amid uncertainty regarding the outcome of the ongoing talks between Pakistan and the International Monetary Fund (IMF), the Pakistani currency hit a new all-time low at Rs271 against US dollar in the interbank market on Thursday.

The domestic currency fell by almost 1% (or Rs2.53) to a new record low of Rs271.36 against the greenback, as compared to Wednesday’s close at Rs268.83, according to the State Bank of Pakistan (SBP).

Analysts said that the IMF has continued to remain tough with Pakistan in the ongoing talks to ensure its prerequisite conditions are implemented. The lender has demanded political consensus on the resumption of the loan programme and has also rejected the government’s circular debt plan.

No relaxation in the IMF’s conditions have been made despite the government’s repeated request. This continues to destabilise financial markets leading to economic uncertainty.

The government has, however, assured the global lending institution that it shall implement all of its conditions. The ongoing 10-day talks will end on February 9, 2023.

The currency has cumulatively devalued by almost (net) 15% – or Rs40.47 – in the past five consecutive working days to Rs271.36, as compared to Rs230.89 on January 25, 2023.

Topline Securities CEO, Mohammad Sohail said, “Uncertainty regarding the timing of inflows of foreign currency has continued to impact the rupee-dollar exchange rate.”

Pak-Kuwait Investment Company (PKIC) Head of Research, Samiullah Tariq explained that the demand for US dollars has remained high in the system due to the piled up imported raw material lying at Karachi ports.

“The currency is market determined. Accordingly, the rupee-dollar exchange rate depreciates on the days when demand for the foreign currency appears higher than supplies in the market,” he added.

The All-Pakistan Sarafa Gems Jewellers Association (APSGJA) reported that the price of gold increased by Rs2,200 per tola (11.66 gram) to Rs207,200 in the country on Thursday.

Published in The Express Tribune, February 3^rd, 2023.

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