Pakistani rupee touches historic low amid economic uncertainty
Islamabad, Jan 26 (EFE).- The Pakistani rupee dipped by about 10 percent against the United States dollar in the inter-bank market on Thursday, the central bank data showed.
The historic one-day plunge came two days after foreign exchange companies removed an unofficial cap on the exchange rate to win International Monetary Fund trust to resume lending.
The exchange rate was opened at 230.89 rupees to the dollar and ended at 255.43, down by 9.61 percent at closing on the day at interbank foreign exchange market, the central bank data said.
The Pakistani currency tumbled to a record low of 255.43 rupees, sliding by more than 24 rupees in a single day, highest in any day.
The gap between exchange rates in the interbank and open markets had widened by more than 15 rupees in recent days, badly hurting the economy and diverting remittances from legal banking channels to grey market.
The Exchange Companies Association of Pakistan announced on Tuesday that it would remove the cap on the US dollar from Thursday.
The country is currently facing an increasingly balance of payment crisis amid dwindling foreign currency reserves which have shrink to less than three weeks’ worth of import bill.
The dollar-strapped nation secured a $6 billion IMF bailout in 2019 which was increased by another $1 billion last year following historic floods in the country.
The IMF suspended disbursements in November due to the government’s failure to meet the lenders demands.
However, experts say the removal of cap on the exchange rates shows government’s willingness to meet IMF demands to secure a tranche of more than a billion dollar. EFE