File photo. Aamir Qureshi—AFP
The Pakistani rupee dropped by Rs. 18.98 against the dollar in the interbank market on Thursday, trading at a historic high of Rs. 285.09 at the close of trade, according to data provided by the State Bank of Pakistan (SBP).
The 6.66 percent drop has been attributed largely to ongoing delays in reviving a stalled International Monetary Fund (IMF) program, though some government officials have suggested it was linked to the uncertainty triggered by the Supreme Court’s judgment on elections in Punjab and Khyber-Pakhtunkhwa.
A day earlier, according to the SBP, the rupee had closed at Rs. 266.11 to the dollar.
Speaking with Geo News, Exchange Companies Association of Pakistan General Secretary Zafar Parahca said the primary concern in the market was a delay in achieving a staff-level agreement with the IMF. He said reports of the IMF demanding the government peg the currency rate to the prevailing ‘grey’ market rate had triggered extensive uncertainty, adding that there was no legitimate reason for the rate climbing so much in a single day.
According to local media, the IMF has demanded a 20 percent reduction in the rupee’s value as a prior condition to reviving the bailout program.
There has been a slow, but persistent, decline to the value of the rupee for several days, as a promised deal with the IMF has failed to materialize. The IMF, even before beginning negotiations, had demanded Pakistan move to market-based currency exchange rate regime, which was fulfilled in January. However, reports suggest the lender feels the value remains inflated and is demanding ever-harsher measures to make up the difference.