Pakistan’s Dollar Bonds Plunge as Dar Vows to Cut Interest Rates

Pakistan’s dollar bonds fell on Wednesday after Ishaq Dar hinted at slashing interest rates on the very first day of taking charge as the finance minister.

The country’s sovereign dollar-denominated bonds slumped by 8 cents to hit record lows with the country’s 2024 dollar bond being traded at 40.2 cents on the dollar, reported Reuters.

The finance minister talking to the media following the swearing-in ceremony said that interest rates will need to be managed and added that the Rupee is currently undervalued and steps will also be taken to manage it.

The newly appointed minister, who has taken charge of the ministry after a gap of almost five years, has also set sights on reducing inflation.

The country has been in a grip of record-breaking inflation in recent months with Consumer Price Index-based inflation (CPI) for August touching the highest level in nearly fifty years.

Last week, Pakistan’s dollar bonds fell after Prime Minister Shehbaz Sharif made an urgent appeal for debt relief from the rich countries in the wake of one of the worst floods in the country’s history.

The then finance minister, Miftah Ismail, had clarified at the time that Pakistan is neither seeking nor it needs any relief from commercial banks or Eurobond creditors.  He had categorically said that Pakistan will pay the $1 billion bond due in December on time.