ISLAMABAD: The Pakistani rupee dropped to a nearly one-year low against the US dollar as the greenback hit Rs167 on Thursday, Pakistani media reported, as an air of uncertainty surrounded the exchange markets.
The greenback touched its lowest against the rupee on May 9 when it was traded at Rs151.17. Since then, it has been appreciating and hit Rs167 on Thursday, just close to the highest price of Rs168.2 in August 2020, the Daily Dawn newspaper reported.
The value of the dollar has increased by 10.5 percent against the rupee in the last four months.
Bankers and currency dealers have been trying to understand why the rupee has been falling, despite growing foreign exchange reserves.
“It may be the widening trade deficit or fear of higher current account deficit in FY22 and increased requirement of US dollars for debt servicing, but right now the exchange rate is not stable,” a currency dealer in the interbank market told Dawn.
Nobody can ascertain the limit of the devaluation of the rupee, which is alarming as the inflow of high cost of imported goods is creating inflation, he added.
There has been no intervention from the State Bank of Pakistan (SBP) to stop the devaluation and bring stability to the rupee’s value.
While presenting the monetary policy last month, SBP Governor Dr. Reza Baqir had said the current account deficit was going to be higher than FY21 and would be between 2-3 percent, while the exchange rate would respond to this deficit in the form of the dollar’s appreciation.
“We are not able to judge where the limit of this devaluation of local currency is, but there are concerns among the stakeholders about this strange exchange rate stability,” the Dawn report quoted a senior banker as saying.
Currency dealers in the open market were also unable to predict an end to the depreciation in the rupee’s worth.
On Thursday, the demand in the open market was still very low but the dollar got a higher price at Rs167.80, according to the report.
Pakistan’s trade deficit also widened by 133 percent to $4.05 billion in August, reflecting mounting pressure on the exchange rate due to higher demand for dollars for imports.
Pakistani rupee slides to one-year low against dollar
https://arab.news/54trc
Pakistani rupee slides to one-year low against dollar
- The greenback hit Rs167 on Thursday as uncertainty surrounded exchange markets
- The value of the dollar has risen by 10.5 percent against the rupee since May
IMF warns against policy slippage amid weak recovery as it clears $1.2 billion for Pakistan
- Pakistan rebuilt reserves, cut its deficit and slowed inflation sharply over the past one year
- Fund says climate shocks, energy debt, stalled reforms threaten stability despite recent gains
ISLAMABAD: Pakistan’s economic recovery remains fragile despite a year of painful stabilization measures that helped pull the country back from the brink of default, the International Monetary Fund (IMF) warned on Thursday, after it approved a fresh $1.2 billion disbursement under its ongoing loan program.
The approval covers the second review of Pakistan’s Extended Fund Facility (EFF) and the first review of its climate-focused Resilience and Sustainability Facility (RSF), bringing total disbursements since last year to about $3.3 billion.
Pakistan entered the IMF program in September 2024 after years of weak revenues, soaring fiscal deficits, import controls, currency depletion and repeated climate shocks left the economy close to external default. A smaller stopgap arrangement earlier that year helped avert immediate default, but the current 37-month program was designed to restore macroeconomic stability through strict monetary tightening, currency adjustments, subsidy rationalization and aggressive revenue measures.
The IMF’s new review shows that Pakistan has delivered significant gains since then. Growth recovered to 3 percent last year after shrinking the year before. Inflation fell from over 23 percent to low single digits before rising again after this year’s floods. The current account posted its first surplus in 14 years, helped by stronger remittances and a sharp reduction in imports. And the government delivered a primary budget surplus of 1.3 percent of GDP, a key program requirement. Foreign exchange reserves, which had dropped dangerously low in 2023, rose from US$9.4 billion to US$14.5 billion by June.
“Pakistan’s reform implementation under the EFF arrangement has helped preserve macroeconomic stability in the face of several recent shocks,” IMF Deputy Managing Director Nigel Clarke said in a statement after the Board meeting.
But he warned that Islamabad must “maintain prudent policies” and accelerate reforms needed for private-sector-led and sustainable growth.
The Fund noted that the 2025 monsoon floods, affecting nearly seven million people, damaging housing, livestock and key crops, and displacing more than four million, have set back the recovery. The IMF now expects GDP growth in FY26 to be slightly lower and forecasts inflation to rise to 8–10 percent in the coming months as food prices adjust.
The review warns Pakistan against relaxing monetary or fiscal discipline prematurely. It urges the State Bank to keep policy “appropriately tight,” allow exchange-rate flexibility and improve communication. Islamabad must also continue raising revenues, broadening the tax base and protecting social spending, the Fund said.
Despite the progress, Pakistan’s structural weaknesses remain severe.
Power-sector circular debt stands at about $5.7 billion, and gas-sector arrears have climbed to $11.3 billion despite tariff adjustments. Reform of state-owned enterprises has slowed, including delays in privatizing loss-making electricity distributors and Pakistan International Airlines. Key governance and anti-corruption reforms have also been pushed back.
The IMF welcomed Pakistan’s expansion of its flagship Benazir Income Support Program, which raises cash transfers for low-income families and expands coverage, saying social protection is essential as climate shocks intensify. But it warned that high public debt, about 72 percent of GDP, thin external buffers and climate exposure leave the country vulnerable if reform momentum weakens.
The Fund said Pakistan’s challenge now is to convert short-term stabilization into sustained recovery after years of economic volatility, with its ability to maintain discipline, rather than the size of external financing alone, determining the durability of its gains.
