Pakistan’s currency plunges to Rs 262.6 against US dollar

| | Karachi
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Pakistan’s currency plunges to Rs 262.6 against US dollar

Saturday, 28 January 2023 | PTI | Karachi

Cash-strapped Pakistan’s currency depreciated to its lowest against the US dollar on Friday in the interbank and open market and closed at Rs 262.6.

At one stage the currency depreciated to Rs 265 in the open market and Rs 266 in the interbank before making a slight recovery by the end of the day.

 According to the State Bank of Pakistan, when the market opened on Friday the currency fell by Rs 7.17 or 2.73 per cent from Thursday’s close.

 The Pakistani rupee’s value has devalued by Rs 34 since Thursday in the interbank, the largest depreciation in both absolute and percentage terms since the new exchange rate system was introduced in 1999.

 The Pakistani rupee has depreciated sharply after the government removed an unofficial cap on the USD-PKR exchange rate to revive the stalled International Monetary Fund (IMF) loan programme.

 The government decision came on Thursday after the exchange companies announced the removal of a self-imposed rate cap in the open market.

 The country needs to complete the ninth review of a $7 billion IMF programme that would not only lead to a disbursement of $1.2 billion but also unlock inflows from friendly countries and other multilateral lenders.

 The IMF conditions include a market-based dollar-rupee exchange parity and high-interest rate and imposition of a 17 per cent general sales tax on diesel and petrol within a week.

 The first two conditions have already been met.

 According to data given by the Exchange Companies Association of Pakistan (Ecap), a substantial amount of remittances started flowing into the country through official channels on Friday.

 A financial analyst, Hameed Khokar with CX investments, expected the flow of remittances to increase in the coming days and felt it would cross $2.5 billion per month again to gradually reach close to $3 billion in the coming months.

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