New Record in Inter-Bank
ISLAMABAD: The US dollar set a new record in the inter-bank and open market trading in Pakistan on Tuesday.
In the inter-bank the dollar-rupee exchange rate hit 303 rupees level while in the open market trading, the greenback hit 321 rupees for the first time.
The US dollar has been showing a consistent growth in the country versus the Pakistani currency.
After the formation of the caretaker government, the dollar has paced up its flight against rupee.
IMF’s bailout package derailing Pakistani currency
Notably, Pakistan’s bailout package deal with the International Monetary Fund proved more fatal for the local currency in comparison with Sri Lankan currency.
Last week, the Pakistani Rupee (PKR) fell to 298 rupees in the open market trading. In inter-bank trading, the dollar-rupee exchange rate widened to 290 rupees.
In sharp contrast to this, the Sri Lankan rupee posted a significant gain after the IMF’s loan approval for the country. When Sri Lanka declared default, its currency depreciated to 364 rupees to a dollar.
A screenshot of dollar-Sri Lanka Rupee exchange rate trend in the last one year.
However, when the IMF approved a bailout package for Sri Lanka in March this year, Sri Lankan currency started regaining value.
Consequently, by Tuesday (August 10), the Sri Lankan rupee has improved to 323 rupees to a dollar.
Notably, the IMF has given 48 months arrangement to Sri Lanka involving $3 billion. However, in the case of Pakistan, the IMF approved only a 9-month stand-by arrangement worth $3.2 billion.
For Pakistan, the IMF has demanded a market-based exchange rate _ opening the way for further devaluation of the rupee amid multiple factors.
Surprisingly, the value of the Sri Lankan rupee has improved significantly after the country got the IMF loan.
However, the IMF package did not support the Pakistani currency because of its harsh and bizarre conditions.
For Pakistan, the IMF approved a loan in July 2023 for nine months, and in March 2024, the program will expire. Thus once again Pakistan will be looking for another IMF loan program to avoid default and to fulfill foreign exchange requirements.
So far, Pakistan has obtained 24 bailout programs from the IMF and the country will need the next one around 2024 amid political uncertainty.
If the general elections are not held on time, it will deepen political uncertainty that will, indeed, trigger economic uncertainty.
