The Pakistani rupee continued its downward trend against the US dollar for a second straight day, falling by a further 4.78% (or Rs12.87) to a new record low of Rs268.30 in the interbank market at roughly 10:30 am on Friday.
Yesterday, the rupee had its single-largest decline in value versus the US dollar, falling 9.61% (or Rs24.54) to Rs255.43. As a result, in just two days, the value of the rupee has decreased by about 14% (or Rs37.41).
Following the government's decision to relinquish control over the rupee-dollar exchange rate and allow market forces to determine it in accordance with an International Monetary Fund (IMF) requirement, the currency experienced a sharp decline.
Pakistan is in favour of restarting the $6.5 billion IMF loan programme that has been stagnant in order to avoid the looming high risk of failing to make international payments.
Read Loan discussions resumed as government complied with IMF demands
The central bank said on Thursday that the nation's foreign exchange reserves have dropped by another $923 million to an unsettling level of $3.7 billion. The stockpiles hardly cover the required imports for two to three weeks.
In addition, Pakistan has a $7 billion foreign debt repayment due in the final five months of the current fiscal year 2023, from February to June. In the following three years, from FY24 to FY26, it will return an additional $74 billion.
The country will soon be able to raise a new $3–4 billion loan from multilateral and bilateral creditors, including the Fund, World Bank, and Asian Development Bank, thanks to the renewal of the IMF programme.
Additionally, the devaluation of the rupee will enhance the amount of export revenue and remittances from workers that pass through authorised channels. The foreign exchange reserves will increase as a result.
