KARACHI: The Pakistani currency on Friday hit an all-time low of Rs.157.10 against the US dollar in interbank market, only a few days after the government unveiled the federal budget for fiscal year 2019-20, before closing at Rs.155.80.
The rupee lost its value by almost 2 percent in a single day on Friday while its weekly losses amounted to 5 percent or Rs.9 against the greenback, dealers said.
Pakistan on Tuesday announced a tax-heavy budget after securing a bailout deal with the International Monetary Fund that requires it to follow a free-floating exchange rate mechanism. The total outlay of the budget is Rs8.2 trillion and the country has set the primary deficit target in line with the IMF demand of 0.6 percent.
It may be recalled that the IMF and Pakistan reached a “staff level agreement” last month for a $6 billion bailout package following months of negotiations on a deal that aimed to bolster Pakistan’s flagging economy and perilously low foreign exchange reserves.
Dealers said the government should intervene and stop the free fall of the national currency since it was causing panic among people and was not good for the country’s economy.
“During the last three months, we have submitted $150 million in banks to strengthen foreign reserves, but we are unable to comprehend the recent rupee depreciation,” Malik Bostan, president of the Forex Association of Pakistan, told Arab News.
“We have asked the government to stop its ministers and officials from commenting on the currency market because their statements are also fueling speculation,” he added.
The Pakistani rupee has depreciated by almost 50 percent since December 2017 when it was traded at Rs105.
“There is a volatility in the currency market and we think that 155 is the level where the currency should find its equilibrium at least for now,” Samiullah Tariq, director research at Arif Habib Limited, told Arab News, adding: “It should be at 160 against the US dollar in December because of the strong inflows of remittances.”
Pakistani rupee plunges to all time low at 157 against US dollar
Pakistani rupee plunges to all time low at 157 against US dollar
- Slide comes days after government unveiled budget for fiscal year to June 2020
- Rupee lost its value by almost 2 percent in a single day on Friday
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.”
