The Pakistani rupee plunged to an all-time low on Thursday against the U.S. dollar, just days after Islamabad sealed a $6 billion bailout package with the International Monetary Fund (IMF) to prop up the country’s slowing economy.
The value of the dollar shot up by 6.50 Rupees (Rs) — a historical high of Rs 148 in open and the interbank markets, according to the foreign exchange dealers.
The latest devaluation is seen as a result of a key IMF condition for Pakistan to institute a market-determined exchange rate without any government interference.
Financial markets responded negatively to the IMF provision amid speculations of further depreciation over the past two days during which the currency plummeted Rs 9 against the dollar, according to Malik Bostan, chairman of Pakistan Forex Association.
“The government has deliberately devalued the Rupee against dollar to meet the IMF condition,” he told Anadolu Agency.
He stressed that the rupee fell by over 7 percent towards noon after having dollar traded at Rs 141-142 to the dollar in the morning, amid rising fears of further inflation and hikes in the prices of essential commodities.
Depreciating foreign reserves and a staggering $60 billion import bill that had left the central bank with no power to control the rate played a major role in the drop, said Bostan.
Pakistan’s current foreign reserves stand at around $16 billion.
Thursday’s drop marks the seventh consecutive devaluation of the currency — one of the worst in Asia — since December 2017. It coincides with a recent increase in gas prices — the two major conditions reportedly demanded by the IMF in exchange for the bailout program.
Apart from the IMF, Pakistan has recently received and loans from longtime strategic partners Saudi Arabia, UAE and China to shore up its depleting foreign reserves.