Pakistan Rupee Price Slides As Prime Minister Of Pakistan Awaits Funds From IMF

Pakistan Rupee Price Slides As Prime Minister Of Pakistan Awaits Funds From IMF

February 4, 2023 0 By Wiley McDermott

The trading price of the Pakistan rupee (PKR) had been declining against the dollar for a long time. The investors were extremely concerned about the constant decline of the PKR against the USD.

Although the concerns are still there it is somewhat good news that the decline in the PKR price has slowed down a bit.

The PKR price is still falling against the USD but the decline has slowed down a bit. It is somewhat of a positive signal for the investors that the price of the PKR may stabilize and then start pumping.

Why has the PKR Decline Slowed Down?

The reason why the PKR price decline has slowed down is because of the expected IMF visit to Pakistan in the upcoming week.

It’s been several months since the government of Pakistan has been working hard to get the bailout package unlocked by the IMF.

However, the country has failed to meet all the conditions that the IMF imposed. This resulted in the IMF not unlocking the bailout package for Pakistan.

Despite several efforts and requests, the International Monetary Fund teams were not convinced by the Pakistani Government that they will fulfill the conditions.

The government of Pakistan was trying to stall the implementation of the conditions that the IMF had demanded. If Pakistani were to implement the conditions, only then the IMF would unlock the bailout package.

Ishaq Dar’s Negative Role

The current finance minister of Pakistan, Ishaq Dar did not work fairly with the IMF. He tried stalling the implementations in order to save the political stature of their government and party, PML-N.

He even tried to artificially hold the trading price of the dollar in the local market. This created a chaotic situation that has pulled Pakistan into huge losses and debts.

Dar had promised that he would bring the trading price of the dollar below PKR200 but he was not able to do it. Instead, he tried his best to keep the value of the dollar close to a particular level.

Therefore, he artificially held the dollar price to PKR225, which was an intervention, and strongly opposed by the IMF.

For a long time, the value of the dollar stayed at around the artificial price in the local market but in the international mark, the dollar price was PKR250.

It constantly hit Pakistan’s economy as international transactions were not being passed or processed by the Pakistani banks.

The banks did not want to face any losses so they did not let any transactions pass to the international platforms.

With the local dollar price being equivalent to PKR225 and the international price being PKR250, the banks were not ready to pay the difference.

The banks did not let any transactions pass, and as the artificial cap was removed, things went crazy for the PKR.

The value of the dollar surged tremendously against the rupee and to this day, the surge has continued. Even when the PKR decline has slowed down, the value of the dollar is scoring higher levels.

Value of PKR against the USD

Due to recent developments, the value of the PKR has declined against the USD. The PKR has recorded a huge 2.7% decline against the trading price of the dollar.

A day earlier, the value of the PKR had recorded a gigantic drop against the USD. It reportedly went down by 9.61% against the dollar on Thursday.

It is the largest single-day drop that the trading price of the rupee has witnessed against the dollar.

As of now, Pakistan is only left with $3.68 billion worth of funds as foreign exchange reserves. The country is now running on fumes as the funds they have would only last until three weeks of imports.

If Pakistan is able to meet the conditions set by the IMF, then it will be able to acquire a $1 billion bailout package from the authority.