Aamir Qureshi—AFP
The Pakistani rupee continued to drop against the U.S. dollar on Wednesday, crossing 190 in the interbank market after depreciating by more than a rupee in a single day.
The latest slide of the local currency comes ahead of uncertainty over the resumption of the new coalition government’s talks with the International Monetary Fund (IMF) to revive a suspended extended loan facility. According to local media, the resumption of the bailout has also been linked to additional loans and grants from other lenders, as well as “friendly” foreign states such as China and Saudi Arabia.
Analysts have also warned that the rupee would continue to lose its value so long as the government fails to reduce its imports and improve exports; the country’s trade deficit in the current fiscal has already crossed $39 billion. The new government’s inability to take harsh decisions, including withdrawing a fuel subsidy that has been described as unsustainable, is also causing panic among investors, who fear it could further delay the IMF program. However, it is undeniable that removing the subsidies would set off a cascading effect on inflation, with analysts claiming it would impact all aspects of life—from fuel costs to electricity tariffs to food costs.
The Pakistani rupee traded at Rs. 190.07 against the greenback in the interbank market during intraday trade, compared to Rs. 188.66 just a day earlier.