Rupee Collapses Against All Currencies Over IMF Loan Delay

The Pakistani Rupee (PKR) has posted losses against the US Dollar (USD) for the second time this week as the local unit deteriorated by Rs. 1.12 against the greenback in the interbank currency market today.

It depreciated by 0.65 percent from yesterday’s (8 November) rate of Rs. 170.51 against the US dollar in the interbank currency market, dropping to its lowest of Rs. 171.63 since hitting embarrassing lows in October.

SBP | ProPakistani

Zafar Paracha, the Chairman of the Exchange Companies Association of Pakistan, told a national daily, “It was expected that after the confirmation of a $6 billion IMF loan, $1 billion would be immediately available which would improve the supply in the interbank market”. He added that the rupee will remain under pressure until the IMF deal is confirmed.

A week prior to today’s hair-raising interbank collapse of the Rupee, the Finance Advisor, Shaukat Tarin, had indicated that an agreement had been reached with the IMF on the restoration of the $6 billion Extended Fund Facility and that a formal agreement will be signed later this week. Regardless of that development, a formal go-ahead for the facility remains unresolved and the pressure continues to mount against the Rupee.

Asad Rizvi, the former Treasury Head at the Chase Manhattan Bank, commented on the delays in fiscal reforms earlier in the day and said, “The ongoing debate about the Good, the Bad & the Ugly economic policies is a meaningless exercise.”

He added, “Whether we like it or not, to borrow IMF funds, our 1st target is POLICY ADJUSTMENTS & to meet the Conditionalities, which is why financing is based on quarterly installments.”

The PKR also failed to report any gains against other major currencies from last week and posted losses in the interbank currency market today.

It posted losses of Rs. 1.06 against the Canadian Dollar (CAD), a whopping Rs. 2.92 against the Pound Sterling (GBP), Rs. 1.2 against the Australian Dollar (AUD), and Rs. 1.57 against the Euro (EUR).

It also posted a loss of 30 paisas against the UAE Dirham (AED) and 29 paisas against the Saudi Riyal (SAR) in today’s interbank currency market.