According to information provided by the Exchange Companies Association of Pakistan (ECAP), the Pakistani rupee experienced a sharp decline against the dollar on Thursday, falling by Rs18.74 in the interbank market. In morning trade, the local currency reached an all-time high of Rs 284.85 against the dollar.
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Analysts blamed the government’s impasse with the International Monetary Fund (IMF) for the record decline, which is 7.04 percent.
According to SBP data, the PKR closed the day on Wednesday at Rs 266.11.
Interbank closing #ExchangeRate for todayhttps://t.co/yixJmUnrgF pic.twitter.com/PWg8EoDAgM— SBP (@StateBank_Pak) March 1, 2023
According to Mohammed Sohail, chief executive of Topline Securities, who spoke to Dawn.com, the currency market’s trepidation over the IMF’s delayed funding was the primary cause of the recent decline.
The International Monetary Fund and Pakistan have been negotiating a deal since early last month, but it has been delayed, which has caused the currency to fall recently.
With its reserves down to just over $3 billion, which is just enough to cover three weeks of imports, Pakistan is experiencing a severe economic crisis. In such a circumstance, the nation urgently needs to sign an agreement with the IMF that would release $1.2 billion in addition to unlocking funding from friendly nations and other multilateral lenders.
Earlier, a reliable source had told Dawn that the staff-level agreement between Pakistan and the IMF would be signed on February 28. Background conversations with officials, however, show that it is becoming more and more difficult for the government to persuade the Fund to release a loan installment.
In order to reach a staff-level agreement on the desperately needed economic bailout, the IMF has reportedly changed its interpretations of at least four prior actions, according to government sources.
Fewer than three weeks’ worth of imports is now barely covered by Pakistan’s central bank’s foreign exchange reserves.