KARACHI: The Pakistani currency on Wednesday hit an all-time low of Rs.146.25 against the US dollar amid looming fears of further devaluation just days 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 dollar reached the all-time high of Rs.146.25 after an increase of 1.5 percent or Rs.2.25 from Rs.144 in the open market. The rupee closed at Rs.144 at the end of the trading day.
Malik Bostan, President of the Forex Association of Pakistan, said he met with Prime Minister Imran Khan on Wednesday who assured him that the IMF had not demanded further devaluation of the rupee.
“The IMF has only demanded an exchange rate based on demand and supply,” Bostan told Arab News. “After the meeting with PM, dollar rates have started cooling down and will further stabilize. We have requested the government to impose a ban on rumors regarding the rupee that are hurting market sentiments. Predictions about the dollar on the media should be stopped.”
Bostan said that Khan had consented to setting up a committee comprising officials from the State Bank of Pakistan, exchange companies and the finance ministry to resolve the issues of exchange companies.
“We have informed him we can increase inflow of green back from $5-6 billion to $7-8 billion provided agreements are facilitated with around 500 international companies operating in Pakistan,” Bostan said, adding that the PM had agreed to devise a mechanism to discourage the outflow of dollars from Pakistan by encouraging investment in the country.
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.
“A market-determined exchange rate will help the functioning of the financial sector and contribute to a better resource allocation in the economy,” the IMF said in a statement issued after the agreement.
“The rumors of further devaluation of Pak Rupee against dollar have squeezed the supply of the dollar and increased demand,” said Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan. “Those holding dollars are not willing to sell, anticipating gains on devaluation.”
Rupee hits record low days after Pakistan-IMF deal
Rupee hits record low days after Pakistan-IMF deal
- Rupee plunges to Rs.146.25 after increase of 1.5 percent or Rs.2.25 from Rs.144 in the open market
- Forex Association president says met PM Khan who assured that IMF had not demanded further devaluation
Pakistan orders four-day workweek, shuts schools to save fuel amid Middle East oil crisis
- The development comes as ongoing US-Israeli strikes on Iran disrupt oil supplies in Strait of Hormuz, push prices past $119 a barrel
- Islamabad bans government purchases, cuts fuel allocation for vehicles as well as workforce in public and private offices by 50 percent
ISLAMABAD: Prime Minister Shehbaz Sharif on Monday announced austerity measures, including a four-day work week, cuts in government expenditures and closure of schools, to offset the impact of rising global oil prices due to an ongoing conflict in the Middle East.
Global fuel supply lines have been disrupted in the Strait of Hormuz, which supplies nearly a fourth of world oil consumption, after Tehran blocked it following United States-Israeli strikes on Iran and counterattacks against US interests in the Gulf region.
Oil prices surged more than 25 percent globally on Monday to $119.50 a barrel, the highest levels since mid-2022, as some major producers cut supplies and fears of prolonged shipping disruptions gripped the market due to the expanding US-Israeli war with Iran.
In his televised address on Sunday night, Sharif said global oil prices were expected to rise again in the coming days but vowed not to let the people bear their brunt, announcing austerity measures to lessen the impact of fuel price hikes.
“Fifty percent staff in public and private entities will work from home,” he announced, adding this would not be applicable to essential services. “Offices will remain open for four days a week. One-day additional off is being given to conserve oil, but it would not be applicable to banks.”
Sharif didn’t specify working days of the week and the government was likely to issue a notification in this regard.
He said a decrease of 50 percent was being made in fuel allocation for government vehicles immediately for the next two months, but they would not include ambulances and public buses.
“Cabinet members, advisers and special assistants will not draw salaries for the next two months, 25 percent salaries of parliamentarians are being deducted, two-day salaries of Grade 20 and above officers, or those who are paid Rs300,000 ($1,067) a month, are being deducted for public relief,” he said.
Similarly, there will be 20 percent reduction in public department expenses and a complete ban on the purchase of cars, furniture, air conditioners and other goods, according to the prime minister.
Foreign trips of ministers and other government officials will also be banned along with government dinners and iftar buffets, while teleconferences and online meetings will be given priority.
“All schools will be off for two weeks, starting from the end of this week, and all higher education institutions should immediately begin online classes,” he said.
Sharif’s comments were aired hours after Pakistani authorities said the country had “comfortable levels” of petroleum stocks and the supply chains were functioning smoothly, despite intensifying Middle East conflict.
Petroleum Minister Ali Pervaiz Malik said three oil shipments were due to reach Pakistan this week, state media reported.
Meanwhile, Pakistan Navy (PN) launched ‘Operation Muhafiz-ul-Bahr’ to safeguard national energy shipments, the Pakistani military said on Monday, amid disruptions to critical sea lanes due to the conflict.
The navy is conducting escort operations in close coordination with the Pakistan National Shipping Corporation (PNSC), according to the Inter-Services Public Relations (ISPR), the military’s media wing. It is fully cognizant of the prevailing maritime situation and is actively monitoring and controlling the movement of merchant vessels to ensure their safe and secure transit.
“With approximately 90 percent of Pakistan’s trade conducted via sea, the operation aims to ensure that vital sea routes remain safe, secure, and uninterrupted,” the ISPR said on Monday. “Currently, PN ships are escorting 2 x Merchant Vessels, one of which is scheduled to arrive Karachi today.”
