Crisis-hit Pakistan’s currency slipped to a record low to close at 255.43 per dollar on Thursday forcing the nation to push for unlocking the stalled $6.5 billion loans from the International Monetary Fund (IMF).
The Pakistani rupee plummeted by 9.6 per cent, the most in at least two decades crossing the previous all-time low of 239.9 recorded in July, according to the State Bank of Pakistan data compiled by Bloomberg since 2000.
It is struggling from the acute balance of payments crisis and desperately trying to secure external financing as it is left with less than three weeks' worth of import cover in its foreign exchange reserves, which declined $923 million to $3.68 billion, reported news agency Reuters.
With the IMF lending being stalled and fear of imminent debt default, the decline in the currency indicates Prime Minister Shehbaz Sharif’s resolve in winning approval for the much-needed funds. The central bank also raised interest rates to a 24-year high in a bid to control inflation.
In 2019, Pakistan availed a $6 billion IMF bailout, which was later topped with another $1 billion last year following devastating floods. However, the IMF then suspended disbursements in November owing to its failure in making progress on fiscal consolidation.
On Thursday, the lender announced sending a mission at the end of January over resuming the programme. Apart from taking fiscal measures, the IMF has asked the country to adopt market-determined exchange rate regime, which the IMF highlighted in its statement.
Pakistan’s money exchange companies removed the limit on the dollar-rupee rate from Wednesday, and said they will let the local currency drop slowly in the open market. Supply of dollars among onshore money-changing businesses has dried up as locals turn to the black market, with the greenback being sold at about 10 per cent above advertised rates.
Meanwhile, Pakistan has urged the US to use diplomatic influence to convince the IMF to show a lenient attitude towards Islamabad, amid tough conditions conveyed by the global lender to revive its fund programme, reported news agency Reuters citing The News International.
The request was made by Finance Minister Ishaq Dar during a meeting with the visiting Deputy Assistant Secretary of the US Department of the Treasury for Asia Robert Kaproth at the Finance Division, The News International reported.
Cash-strapped Pakistan has urged the US to use diplomatic influence to convince the IMF to show a lenient attitude towards Islamabad, amid tough conditions conveyed by the global lender to revive its fund programme, it reported on Thursday.