Prime Minister Shehbaz Sharif has convened an emergency meeting regarding the economic situation of the country, Radio Pakistan reported Wednesday.
The meeting will be attended by the economic team and other high-ranking government officials.
It will discuss the reasons behind the recent appreciation of the dollar against the rupee and consider ways to curb the trend. The economic team will also provide a briefing regarding the country’s economic situation.
Pakistani rupee, PSX suffer amid political uncertainty
After shattering all previous records, the Pakistani rupee on Wednesday further depreciated to Rs226 after losing 4.1 against the US dollar in the interbank market.
The Pakistani rupee had hit an all-time low of 224 against the dollar on Tuesday in the afternoon interbank trade, before closing at 221.99.
It was the highest day-on-day depreciation after June 26, 2019, when the currency fell by Rs6.80. Meanwhile, the Pakistan Stock Exchange witnessed a negative trend as the KSE-100 index fell 248 points to 40,140 points.
The ruling PML-N’s thumping in the Punjab by-elections has triggered political uncertainty along with import pressure taking the Pakistani rupee on a downward trajectory.
Analysts believe, however, that the domestic political and economic situation are not the only factors at play.
“The dollar is getting stronger in the global market almost against all the world currencies and the Pakistani rupee is not the exception,” said Alpha Beta Core CEO Khurram Schehzad.
Speaking of Pakistan’s financial situation, Schehzad said that the country’s external account issues “are not settled as yet, the IMF (International Monetary Fund) is yet to be on board, and the flows are yet to materialise”.
“Global rating agencies have put a negative outlook on the economy, so that is an additional burden that is weighing on the financial markets in the general and foreign exchange market in particular,” he added.
Exchange Companies Association of Pakistan (ECAP) Chairperson Malik Bostan told Geo.tv that there were three reasons behind the constant devaluation of the local unit.
The forex expert said that investors are jittery at the moment as the Opposition PTI has bagged more seats than the PML-N in the Punjab by-polls — creating uncertainty over the future of the current set-up.
Bostan added that the speculations regarding the IMF’s Executive Board’s approval would take time and the money lender’s statement of being ready to negotiate with a caretaker government have exacerbated the devaluation.
He also pointed out that since the Taliban took over Afghanistan, Pakistan has provided them trade relief, resulting in additional pressure on the rupee.
The currency trader said that the State Bank of Pakistan (SBP) cannot intervene in the rising rupee-dollar parity as the country has agreed that the central bank will not intervene in the matter.
“…but even if it wishes to intervene, the SBP does not have enough dollars to inject into the market,” he said, adding that if the government wants to save the rupee, it will have to curtail the imports.
