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
Rating firm S&P says it won’t rush Iran war downgrades, sees risks for countries like Pakistan
- Agency says it is monitoring indebted energy importers as higher oil prices strain finances
- Gulf economies seen better placed to weather shock, though Bahrain flagged as vulnerable
LONDON: S&P Global said it would not make any knee-jerk sovereign rating cuts following the outbreak of war in the Middle East, but warned on Thursday that soaring oil and gas prices were putting a number of already cash-strapped countries at risk.
The firm’s top analysts said in a webinar that the conflict, which has involved US and Israeli strikes against Iran and Iranian strikes against Israel, US bases and Gulf states, was now moving from a low- to moderate-risk scenario.
Most Gulf countries had enough fiscal buffers, however, to weather the crisis for a while, with more lowly rated Bahrain the only clear exception.
Qatar’s banking sector could also struggle if there were significant deposit outflows in reaction to the conflict, although there was no evidence of such strains at the moment, they said.
“We don’t want to jump the gun and just say things are bad,” S&P’s head global sovereign analyst, Roberto Sifon-Arevalo, said.
The longer the crisis was prolonged, though, “the more difficult it is going to be,” he added.
Sifon-Arevalo said Asia was the second-most exposed region, due to many of its countries being significant Gulf oil and gas importers.
India, Thailand and Indonesia have relatively lower reserves of oil, while the region also had already heavily indebted countries such as Pakistan, Bangladesh and Sri Lanka whose finances would be further hurt by rising energy prices.
“We are closely monitoring these (countries) to see how the credit stories evolve,” Sifon-Arevalo said.
