KARACHI: Pakistan’s national currency continued to slump on Thursday, hitting another historic low of Rs200 against the US dollar in the interbank market amid rising demand for import payments and uncertainty related to talks with the International Monetary Fund (IMF) for the resumption of a $6 billion loan program.
The rupee declined by 0.81 percent, or Rs1.61, during the trading session today.
The currency depreciation continued despite the ongoing negotiations between the IMF and Pakistani authorities which started in Doha, Qatar, on Wednesday.
“The dollar was trading above Rs200 in the interbank market due to increasing demand from importers to make foreign payments,” Zafir Paracha, general secretary of the Exchange Companies Association of Pakistan, told Arab News.
He said the remittance inflow was also slow since exporters were not bringing export proceeds to the country owing to the rising rupee-dollar parity which was benefitting them.
The rupee has declined by Rs17.07 against the greenback since the new government took control of the country last month.
Aadil Jillani, head of economic division at Trust Securities & Brokerage Limited, blamed the gap between external financing requirements and Pakistan’s repayment capacity on lack of policy response from the government.
“[This is] constantly bleeding markets and the economy,” he said. “This economic meltdown is taking its toll as the dollar has hit an all-time high and is trading above Rs200 in the interbank and open markets.”
Pakistan’s discussions with the IMF have become complicated due to an economic relief package amounting to $1.7 billion which was announced by former prime minister Imran Khan earlier this year.
Prime Minister Shehbaz Sharif is hesitant to remove the fuel and power subsidies included in the package since his administration fears public backlash amid rising inflation.
Economists have advised the government, however, to undo these subsidies or risk greater political and economic damage.