The Pakistani rupee fell to a historic low against the dollar on Thursday after the exchange rate cap was lifted as Islamabad seeks a much needed aid package from the International Monetary Fund.
Pakistan is facing a difficult economic situation as foreign exchange reserves are no longer sufficient except to pay the cost of imports for a period of about three weeks, in light of a seemingly endless effort to pay off foreign debt.
According to several sources, the rupee in the official market today, Thursday, fell to 255.43 rupees against the dollar. Topline Securities for the financial broker said the decline was 9.6%.
The previous official drop to Rs 240 per dollar was recorded in July 2022, when Pakistan’s long-troubled economy was devastated by political chaos and devastating floods.
In 2019, former Prime Minister Imran Khan’s government negotiated a multibillion-dollar loan package from the International Monetary Fund, but the economy suffered when Khan backtracked on his promise to cut subsidies and market interventions that eased the cost-of-living crisis.
Prime Minister Shahbaz Sharif, who replaced Khan last spring after a no-confidence vote, was hesitant to honor the terms of the loan in light of his declining popularity.
The head of the Association of Foreign Exchange Companies of Pakistan, Zafar Paracha, told AFP that the restriction was lifted on Wednesday “in agreement with the central bank.”
In turn, Top Line Securities CEO Mohamed Suhail told AFP that “inflation will continue to rise.”
Pakistan is suffering from a serious shortage of foreign exchange as a result of the growing demand for the dollar. Thousands of sea containers with raw materials needed for industry, food and medical equipment are stuck in the port of Karachi due to the refusal of banks to guarantee the transactions of suppliers in dollars.
Pakistan also experienced a nationwide power outage this week as a result of cost-cutting measures, costing the textile industry alone an estimated $70 million.
