Aamir Qureshi—AFP
The Pakistan Tehreek-e-Insaf’s victory over the Pakistan Muslim League (Nawaz) in the Punjab by-elections, coupled with the perception that this will provoke further political uncertainty in the country in the days to come, on Monday resulted in the Pakistani rupee dropping to a new low against the U.S. dollar and a drop in the benchmark KSE-100.
Throughout the day, the rupee has posted a continuous decline, hitting Rs. 215.25 to the U.S. dollar in the interbank market, and roughly Rs. 216 in the open market. The dollar had started the day at Rs. 210.95 in the interbank market, dropping Rs. 4.3 (or roughly 2 percent), during trading.
Similarly, the benchmark KSE-100 index of the Pakistan Stock Exchange also saw a persistent decline, plunging over 700 points, hitting 41,329 points after starting the day at 42,074 points.
Market analysts said that the political uncertainty, coupled with pressure from import payments, had led to the decline in the value of the national currency. Speaking with local media, they said the government needed to announce a formal strategy in the wake of the by-election results to alleviate the concerns of investors. A key concern of investors, they said, was whether the incumbent government would cave to pressure from the PTI and announce early elections.
If the government were to announce early polls, it would provoke further uncertainty—especially with regards to the viability of the pending release of the next tranche of an IMF program—and could trigger even more currency devaluation.
Reacting to the development, PTI leader Asad Umar acknowledged that the political uncertainty was to blame. “Time to stop this badly conceived, badly executed, totally gone wrong experiment,” he wrote on Twitter. “Pakistan cannot be made to suffer anymore for poor decisions.”