Pakistan: PKR plunges to all-time low due to economic crisis
Aug 23, 2023
Islamabad [Pakistan], August 23 : The Pakistani Rupee (PKR) touched a record low of Rs299.64 against the dollar in the interbank market by further sliding 0.63 per cent on Wednesday, ARY News reported.
According to the State Bank of Pakistan, the local unit fell by Rs 0.63 against the US dollar to close at Rs299.64 in interbank against Tuesday’s close of Rs299.1, extending the losses for the third season.
In the open market, the dollar was changing hands for PKR 314. The currency dealers have attributed the depreciation in the rupee to an easing in import restrictions that have lifted demand for the USD, as per ARY News.
Notably, Pakistan imposed import restrictions in 2022 to stem outflows from its shrinking foreign reserves. The removal of those restrictions beginning in June was a condition of a USD 3 billion International Monetary Fund (IMF) loan programme to help the crisis-ridden economy.
Pakistan is currently being governed by a caretaker government that is tasked with steering the country through to a national election while grappling with searing political tension as well as historically high inflation and interest rates, ARY News reported.
Notably, Pakistan is battling a huge economic crisis, with staggering inflation and depleting Forex reserves.
Earlier this month, Islamabad witnessed a downfall in the productive and services sectors as the companies were scrambling to cut expenses and weighing the option of job cuts, salary freeze or reduction in salaries, as per The News International.
Although Pakistan was able to secure the IMF deal just in time, the conditions imposed by the body are turning out to be tedious to implement.
Under this, Pakistan imposed additional taxes of 215 billion Pakistani Rupees (PKR) and slashed expenditures by 85 billion PKR in its budget.
With sky-high inflation and foreign exchange reserves barely enough to cover one month of controlled imports, Pakistan has been facing its worst economic crisis in decades, which analysts say could have spiralled into a debt default in the absence of the IMF deal.
