Pakistan’s rupee plunged to a historic low today, further deteriorating amidst the political unrest following the arrest of former prime minister Imran Khan. The currency slumped by 3.3% to an unprecedented 300 against the dollar, according to the foreign-exchange desk at Arif Habib Ltd, as reported by Bloomberg. Meanwhile, the Karachi stock exchange index managed to recover slightly after experiencing a decline in the past three sessions.
Beyond the ongoing political turmoil, Pakistan’s economy has been grappling with significant challenges in recent months. Mounting inflation and pressures on the country’s external balance of payments have been major factors, driven by both global shocks and domestic developments. In April, Pakistan witnessed a record-breaking inflation rate of 36.4%, surpassing all other South Asian countries, and a notable increase from the previous month’s 35.4%.Amidst these difficulties, Pakistan has been engaged in discussions with the International Monetary Fund (IMF) for a potential bailout.
The IMF spokesperson confirmed the organization’s continued involvement with Pakistan in securing funding and policy assurances, aiming to reach an agreement on the ninth review of the $6.7 billion loan initially established in 2019.In efforts to secure funding, Islamabad has implemented several measures, including the removal of exchange rate caps, resulting in a depreciation of the rupee. Additionally, taxes have been raised, subsidies have been removed, and the central bank has increased the repo rate to an all-time high of 21%.Overall, Pakistan’s economic challenges persist as the country seeks financial stability through discussions with the IMF and the implementation of various measures aimed at addressing inflation and balance of payments issues.