Continuing devaluation of rupee currency following IMF bailout accord

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Pakistan’s rupee and stocks fell, extending the week’s losses after the country secured a bailout from the International Monetary Fund (IMF) – (AFP/File)
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The Pakistani currency fell further against the dollar on Friday, ending the day in the interbank market at 147.66 against the US dollar. (AFP/File Photo)
Updated 18 May 2019
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Continuing devaluation of rupee currency following IMF bailout accord

  • Rupee hits 149.50 in interbank market before closing at 147.66 against US dollar compared to Thursday’s close of 146.52
  • Pakistan Stock Exchange’s benchmark index falls by 804 points on Friday

KARACHI: The Pakistani currency fell further against the dollar on Friday, ending the day in the interbank market at 147.66 against Thursday’s close of 146.52 against the US dollar, dealers said.
The continuing devaluation comes less than a week after Pakistan signed a bailout deal with the International Monetary Fund that comes with strict reform conditions, including to maintain a free-floating exchange rate. The rupee has depreciated by 4.4 percent since the IMF and Pakistani authorities agreed to a bailout package on Sunday.
The Pakistani rupee, in the open market, on Friday closed at 151 against the dollar as compared to Thursday’s close of 147, the Exchange Companies Association of Pakistan data said.
Taking cue from the currency market, the stock market also shed 804 points on Friday, falling due to the devaluation of the rupee for the last two working days, an expected hike in the policy rate in the next monetary policy meeting on Monday and selling pressure from mutual funds (net selling of $14mn in 4 sessions).
“Rupee free fall against the dollar, falling foreign exchange reserves, likely surge in state bank policy rate announcement on May 20, concerns over IMF conditions and targets for the federal budget for fiscal year 19 played a catalyst role in bearish close,” said Ahsan Mehanti, the Chief Executive at Arif Habib Corporation.
“This movement reflects demand and supply conditions in the foreign exchange market,” the State Bank’s chief spokesman said in an emailed statement on Thursday. “It will help in correcting market imbalances.”
Market participants expect a further policy rate hike in the wake of the IMF agreement as the central bank is scheduled to announce the monetary policy for the next two months on Monday.
“The central bank is expected to increased 100 basis points bps 11.75 percent,” Muhammad Sohail, CEO of Topline Securities, told Arab News.
With inflation running at more than 8%, a weaker currency is likely to add to pressure on household budgets, particularly on power and gas bills, where the government faces growing pressure to allow regulated prices to rise.
The International Monetary Fund and Pakistan reached a “staff level agreement” on Sunday for a $6 billion bailout package following months of negotiations on a deal that aims to bolster Pakistan’s flagging economy and perilously low foreign exchange reserves.
Talks with the IMF began soon after Khan’s government was appointed last August but a package has been held up by differences over the pace and scale of reforms that Pakistan would be required to undertake.
The IMF has pressed Pakistan to improve tax revenue collection, bolster foreign currency reserves and narrow a current account deficit expected to top 5 percent of gross domestic product this year.
The Fund has also pushed Pakistan to embrace a flexible rupee policy. Pakistani officials fear these steps will further hurt economic growth, cause of spike in the key interest rate and push the Pakistani rupee further down.


In Peshawar prison, women inmates share food and prayers in Ramadan

Updated 27 May 2019
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In Peshawar prison, women inmates share food and prayers in Ramadan

PESHAWAR: Located next to iconic landmarks like the Provincial Assembly and the High Court, the central prison in Pakistan’s northwestern city of Peshawar is a handsome old building bursting at the seams with over 1,800 prisoners. 38 of them are women.

The existing building was established in 1854 with an occupancy limit of 425 prisoners, but with the influx of thousands of inmates, a new block is now under construction and slated for completion by the end of the year. 

Inside the prison kitchens, convicted prisoners make round traditional bread and prepare Iftar meals for other inmates. May 25, 2019. (AN photo by Saba Rehman)

The prison department provides basic facilities and food to inmates still under trial and to those convicted in the male, female and juvenile sections. During the month of Ramadan, these facilities extend to include special meals at Iftar, like sweet rice, chicken and potatoes served with a side of milky hot tea. 

A female inmate cooks chicken gravy for herself and other prisoners in the prison barracks before Iftar. May 25, 2019. (AN photo by Saba Rehman)

“We get good food in this month (of Ramadan) and are free to offer our prayers and recite the Holy Quran at any time,” said Shahida, an inmate who has been in the prison for five years but was convicted for murder late last year. 

Acting superintendent of the prison releases prisoners after the court orders arrive. The inmates receive the good news right before Iftar time in Ramadan. May 25, 2019. (AN photo by Saba Rehman)

The large hall of the women’s section has a scattering of beds, but most inmates sleep, eat and pray on quilts spread out on the floor. 

A police officer stands guard outside the entrance to the women’s section in Peshawar’s central jail. May 25, 2019. (AN photo by Saba Rehman)

"Some of the women get sick often,” said Iffat Shaheen, assistant superintendent of the women’s prison section. “Right now we have two pregnancy cases and one case of HIV AIDS, so we try to give them good meals. A few prisoners have small children inside prison with them and they get milk as well.” 

A female inmate gives English lessons to some of the children at the Peshawar central prison. May 25, 2019. (AN photo by Saba Rehman)

Another female inmate convicted for possession of drugs has been in prison for seven months. She declined to be identified but said they had a lot of free time in Ramadan that could be put to good use. 

Women in Peshawar’s central prison spend their days reading the Quran and reciting prayer beads during the month of Ramadan. May 25, 2019. (AN photo by Saba Rehman)

“This is a helpful time for us to learn skills like handicrafts and sewing,” she said. “When we leave prison, perhaps these things will pave the way for a good, halal living.” 

A woman inmate at Peshawar’s central jail has decorated her hands with henna in anticipation of the holy festival of Eid, which will mark the end of Ramadan. May 25, 2019. (AN photo by Saba Rehman)
Rooh Afza, a popular indigenous drink made from herbs and flowers, is served around Peshawar’s central prison by the bucketfuls before Iftar. May 25, 2019. (AN photo by Saba Rehman)
Weekly menu written out for prisoners at Peshawar’s central jail in Urdu. May 25, 2019. (AN photo by Saba Rehman)