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The rupee continues to fall against the dollar, falling below Rs12 in the interbank market. The Pakistani rupee continued its downward trajectory on Friday, falling more than Rs12 versus the US dollar in the interbank market as the government relaxed currency controls in attempt to persuade the International Monetary Fund (IMF) to release a delayed loan tranche.
The local unit was trading at Rs268.30, down from Thursday's interbank closing of Rs255.43.
Since Thursday, the dollar has gained Rs30.41 in the interbank market after forex firms eliminated a rate cap – a major demand of the IMF as part of a bailout deal agreed with in 2018.
According to the ECAP rates, the rupee fell to 265 to the dollar in the open market, a Rs3 drop from the previous day.
One of the primary prerequisites stated by the IMF for reopening the delayed bailout package is a market-driven currency rate.
Finance Minister Ishaq Dar's efforts to preserve the rupee since his appointment in September, including alleged currency market operations, have gone counter to IMF guidance.
The rupee had lost 24.11 in the interbank market the day before, sliding as low as 255.43 rupees to the dollar. The 9.6% decrease is the second-largest in a single session.
The previous low of 239.94 rupees was set on July 28, 2022, when Pakistan's long-struggling economy was undermined further by political turmoil and disastrous floods.
Pakistan is eager for external finance as it faces an extreme balance of payments crisis, with less than three weeks' worth of import cover in its foreign exchange reserves, which plummeted $923 million to $3.68 billion in the latest report.
In 2019, Pakistan received a $6 billion IMF bailout. It was topped up with additional $1 billion last year to assist Pakistan in the aftermath of severe floods, but payouts were delayed in November due to Pakistan's inability to make greater progress on fiscal restructuring.
Former Prime Minister Imran Khan's administration negotiated a multibillion-dollar financing agreement from the lender of last resort in 2019.
However, the economy regressed when Khan broke his commitment to reduce subsidies and market interventions that had softened the cost-of-living issue.
Prime Minister Shehbaz Sharif, who deposed Khan in a no-confidence vote this spring, has also been hesitant to satisfy loan terms due to his declining popularity.
President of the Exchange Companies Association of Pakistan, Zafar Paracha, told AFP that the ceiling was lowered "in conjunction with the state bank" on Wednesday.
— Additional reporting by Reuters and AFP
