Despite the International Monetary Fund’s (IMF) announcement that the multibillion-dollar loan programme would resume, the Pakistani rupee plunged to an all-time low against the US dollar on Tuesday, reaching Rs224 in the interbank market.
Today, the local currency continued to lose value against the US dollar and lost another Rs8.80. In the interbank market on Monday, the rupee fell by Rs4.25 or 1.97 per cent against the US dollar.
With ongoing political unrest and a bad macroeconomic environment, the currency has considerably depreciated.
The State Bank of Pakistan (SBP) has begun to stifle the outflow of small dollar amounts of less than $100,000 in order to prevent a further decline in the reserves, putting numerous factories at risk of closure and financial penalties.
According to the sources, Pakistan is using a variety of capital controls, including restrictive measures, to prevent a situation resembling default while the IMF takes its time approving and disbursing a $1.12 billion loan tranche.
Resuming the loan programme will increase the nation’s ability to make international payments and unlock foreign currency inflows from other bilateral and multilateral sources as well.
Additionally, China has extended its $2.3 billion loan to Pakistan and deposited it in the State Bank a few weeks ago. In line with the decline in the rupee, the Pakistan Stock Exchange (PSX) fell 770 points during Monday’s intraday trading. After “political and economic uncertainties in Pakistan,” the capital market came under fresh pressure, a specialist claimed.
Finance Minister Miftah Ismail stated in an interview that the government would keep making difficult choices in an effort to save the economy and keep the nation from going bankrupt.
