File photo. Aamir Qureshi—AFP
Pakistani currency drops nearly Rs. 3 against the dollar in single, trading at high of Rs. 189 in interbank market
The Pakistani rupee continued its slide against the U.S. dollar on Thursday, hitting a record-setting Rs. 189 to the dollar in the interbank market, as the country reels from a constitutional crisis whose legality is currently pending ruling by the Supreme Court of Pakistan.
A day earlier, the rupee had hit Rs. 186.13 at the close of trading. On Thursday, it slid by Rs. 2.87, hitting Rs. 189, the lowest value of the rupee against the greenback in Pakistan’s history.
Pakistan presently has no functional government, as President Arif Alvi’s abrupt dissolution of the National Assembly has left it without a federal cabinet or an elected prime minister. The president, earlier this week, directed Imran Khan to continue as prime minister until the formation of an interim government, but this has yet to be notified by the Cabinet Division, leaving his constitutional status in a state of limbo.
Currency dealers have said part of the rupee’s slide is linked to the political unrest. Another factor being cited is the International Monetary Fund’s announcement that it is “pausing” Pakistan’s bailout program, pending the formation of a new government. In a brief statement, the global lender said it would resume negotiations with a new government and determine how best to continue with the Extended Fund Facility inked by the PTI-led government.
Meanwhile, importers say they are facing problems securing dollars to make payments, with traders and industrialists coming out strongly against the concept of a free float exchange rate. In recent days, calls have mounted for the State Bank of Pakistan to play its role in bringing stability to the exchange rate, as its current volatility poses a serious threat to the economy. Even in the open market, say traders, it has become nearly impossible to secure dollars, as demand far outstrips the supply.
The government adopted a free float exchange rate in 2018, though ministers have since alleged that the currency is being manipulated by hoarders and its true value is far better than the interbank rates would suggest. The central bank has yet to issue any statement over the prevailing exchange rate situation, while government officials have claimed to media that it is the result of higher demand for dollars from importers and would return to “normal” after some time.
Experts, meanwhile, have warned that the country’s foreign exchange reserves are unable to fulfill more than two months of import payments and urged authorities to take notice and stem the economic crisis.