KARACHI: Pakistan’s national currency on Thursday hit a new historic low of Rs188.18 against the US dollar amid political turbulence, diminishing foreign exchange reserves and a stalled International Monetary Fund (IMF) loan facility.
The Pak rupee went above Rs189 in the morning trade session as the country’s top court resumed the hearing of a case focusing on the dismissal of a no-confidence vote against Prime Minister Imran Khan which led to a constitutional and political crisis in the country. As the day progressed, however, the rupee bounced back a bit and closed at Rs188.18.
The US dollar was trading at Rs189.25 for buying and Rs190.50 for selling in the open market during the day.
According to the Exchange Companies Association of Pakistan (ECAP), the Saudi Riyal traded at Rs50.20 and Rs50.70 while Arab Emirate Dirham hovered around 51.30 and 51.80 for buying and selling, respectively, on Thursday.
“If corrective measures are not taken, the freefall of Pak rupee may lead the country to a situation like Sri Lanka which is witnessing price hikes and shortages of essential goods like petroleum products,” Zafar Paracha, ECAP general secretary, told Arab News.
Pakistan’s national currency has witnessed a massive decline against the US dollar since Prime Minister Imran Khan took oath as the country’s 19th prime minister in August 2018. The central bank’s statistics reveal the dollar appreciated more than 51 percent from Rs124.24 on August 20, 2018, to Rs188.18 on April 7, 2022.
As the Supreme Court started its proceedings on Thursday to determine the constitutionality of the speaker’s ruling to dismiss the no-trust vote against PM Khan, traders said the market was hoping for an early verdict.
“We are waiting for the judgment of the Supreme Court of Pakistan that is likely to set the future course of the currency market,” Paracha said, adding: “The judgment may bring some stability to the currency market in the days to come because at least there will be some form of government [in the country].”
Analysts warned the US dollar could go up to Rs200, increasing inflationary pressure and foreign debt burden, if the political chaos continued any further.
“The rupee devaluation will significantly increase the debt component and imported inflation,” Aadil Jillani, head of the Economic Division at the Trust Securities and Brokerage, told Arab News, adding the situation would also have a negative impact on the cost of doing business in Pakistan.
“In addition to that, it will also downgrade Pakistan’s ratings and massively hit its current account deficit and deplete reserves,” he continued.
Jillani added the political situation in the country was calling into question the state’s ability to continue policy reforms, run simple administrative matters and secure external financing.
Analysts agreed the national currency was also under pressure due to the stalled IMF extended fund facility.
Pakistan and the IMF were negotiating to complete the seventh review of a $6 billion loan program before the political crisis began.
The discussion stalled as the international lending agency expressed concerns over a relief package of about $1.7 billion announced by the government which included freezing of petroleum prices and cuts in electricity tariff in response to rising inflation.
The fund has said it will resume the review process after the new government is formed.
“The Fund looks forward to continue its support to Pakistan and, once a new government is formed, we will engage on policies to promote macroeconomic stability, and enquire about intentions vis-a-vis program engagement,” Esther Perez Ruiz, the IMF’s resident representative for Pakistan, said in a statement on Monday.
Pakistani rupee nosedives against US dollar amid political crisis
https://arab.news/zwg76
Pakistani rupee nosedives against US dollar amid political crisis
- Dealers warn country may witness Sri Lanka-type situation if currency devaluation continues
- US dollar has appreciated by more than 51 percent against the rupee since August 2018
Pakistan official vows to address trade challenges arising out of Afghan border closures
- Pakistan closed key border crossings with Afghanistan in October following fierce clashes
- Border crossings have led to financial losses, rising unemployment for traders on both sides
KARACHI: Prime Minister’s Coordinator on Commerce Rana Ihsaan Afzal on Wednesday reassured traders in the southwestern Chaman city that Islamabad would address issues arising out of the closure of Pakistan-Afghanistan border crossings since October.
Pakistan closed its key border crossings with Afghanistan, including the one in Chaman, for trade and movement of people in October after fierce clashes between the two countries. Pakistan and Afghanistan both claimed to have killed scores of each other’s soldiers during the conflict.
Traders on both sides have urged their governments to reopen the borders, saying that closures have caused financial losses and led to disruptions in perishable goods exports, rising unemployment and hardships for the local community dependent on cross-border trade.
Afzal chaired a high-level consultative meeting with leaders, traders and community representatives from Chaman District and the Chaman Chamber of Commerce & Industry in Islamabad on Wednesday, the Pakistani commerce ministry said in a statement.
“The coordinator reaffirmed the government’s commitment to addressing border trade challenges and ensuring that local communities continue to thrive,” the ministry said.
The statement said Afzal noted the concerns raised by the stakeholders, stressing that resolving the issues of Chaman’s communities is a priority for the government.
Delegates spokes about the socio-econmic impact such as financial losses and rising unemployment due to the suspension of border trade between both sides.
“The matters discussed will be escalated to relevant national and bilateral forums to seek sustainable solutions, with a focus on establishing predictable, transparent, and efficient border management protocols that balance security with legitimate trade,” the statement said.
Ties between Islamabad and Kabul have remained strained since the Afghan Taliban seized power in Afghanistan in 2021. Pakistan has since then suffered a surge in militant attacks that it blames on militants based in Afghanistan, a charge Kabul denies.
Tensions between the two sides have resulted in frequent border closures over the years, hampering trade and commerce.
Islamabad has repeatedly accused the administration in Kabul of failing to take action against militant outfits such as the Tehreek-e-Taliban Pakistan (TTP) and the separatist Balochistan Liberation Army (BLA), which it alleges carry out attacks targeting Pakistan from Afghan soil. Kabul denies the allegations.
According to figures shared by the Pak-Afghan Joint Chamber of Commerce and Industry (PAJCCI) in October, the annual Pakistan-Afghan trade volume declined from $2.5 billion dollars to $10 million during the last two fiscal years.
