Dar-pegging has evolved into Dar-begging after the Finance Minister appealed to charitable organizations to raise $2 billion from overseas Pakistanis, throwing markets into panic mode. Prime Minister Shehbaz Sharif’s remarks that the International Monetary Fund (IMF) was giving Dar a “very tough time” also weighed heavily on the local unit.
The Pakistani rupee (PKR) fell by almost 2.5 percent against the dollar during intraday trade on Friday, dropping as low as 278.5 against the greenback after Finance Minister Ishaq Dar approved a plan for charitable organizations to help raise around $2 billion from ex-pats.
At close, the rupee depreciated by 1.89 percent and suspended movement at 276.57 after losing Rs. 5.22 against the greenback.
A high-profile investment banker told ProPakistani,
Traders were taken aback by the FM’s comments from yesterday and have so far been reluctant to dabble with dollar trade as rates could plunge further. Since counters opened today, the rupee has lost over Rs. 6 and the IMF talks have added in part to the decline as well. Dar’s open declaration for a dollar donation drive is a new low for the country.
In the open market, the domestic currency has dived by around 3 percent to a record low of 280 per US dollar compared with last week’s lows of 261-266 per US dollar. The rupee fell 12.5 fell in the previous week, but the majority of the decline came at the week’s close after the currency was finally ‘freed’ against the US dollar in the inter-bank market. Since then, the PKR has lost over Rs. 41 after shedding a further Rs. 7.14 today.
The local unit will likely depreciate significantly as part of the preconditions for reviving the IMF bailout. Given the free-float model, no one can predict how low the currency may fall. Even more so, Dar’s new economic stance may add more spice in the coming days.
Similarly, Pakistan’s dollar-denominated bonds also declined due to the reasons mentioned above, with bonds due in April 2024 currently at 56.94 cents on the dollar.
The PKR was bearish against all of the other major currencies in the interbank market today. It lost Rs. 1.28 against the Australian Dollar (AUD), Rs. 1.39 against the Saudi Riyal (SAR), Rs. 1.42 against the UAE Dirham (AED), Rs. 2.71 against the Euro (EUR), and Rs. 2.87 against the Canadian Dollar (CAD).
Moreover, it lost Rs. 1.51 against the Pound Sterling (GBP) in today’s interbank currency market.