The Pak rupee on Tuesday plunged more than Rs 11 against the US dollar over fears that the International Monetary Fund (IMF) conditions for a loan may further devalue the Pakistani currency.
As a result, the rupee went past Rs 138 to a dollar during the day’s trading session. Traders said fears of devaluation increased demand for the greenback from importers and added that the local currency is continuously showing weakness.
On Monday, the government announced to seek IMF’s help to cope with the country’s financial crisis. Finance Minister Asad Umar vowed to revive the economy on a sustainable and permanent basis and promised steps to provide relief to common people.
Prime Minister Imran Khan, who has been reluctant to ask the IMF for emergency loans, said last week that Pakistan might need to return to the IMF to address its mounting balance of payments crisis. If there is an IMF bailout package, it would be the second for Pakistan in 5 years.
Since the beginning of this year, the exchange rate has kept fluctuating from high to low. For a brief period it shown some signs of improvement, however the Pakistani rupee has now fallen to 138 rupees against a dollar, which is the lowest ever in country’s history.
As rupee weakens against the US dollar, the affects are seen on the entire economy including the local automobile industry. Since December 2017, automakers operating in Pakistan have revised their product prices four to five times already with an increase of up to 200,000 on each local assembled model. With Pak Rupee now hitting the record low, auto consumers of Pakistan are going to be hit by another price revision quite likely in near future.