It is very unfortunate that the free-fall of Pak currency against US dollar is going on unabated (d and it is feared that it might touch the unpreceded 200-mark in coming days against US dollar for the first time in history as the new constitutional crisis is upon us after the Supreme Court decision that votes of defected law-makers would not be counted in Assembly’s proceedings.
The Pak rupee touched a new low against USD as the PKR exchange rate showed it was at PKR 195.00 against US dollar in trading of currency market on Wednesday.
There is no denying that political uncertainty was already taking toll on the economy for the last many months and with the latest constitutional crisis, a panic-like situation is prevailing. In fact, panic buying was reported in the open market as also the Stock Exchange felt a jolt with investors keeping at bay from doing businesses, as the Supreme Court decision has added to existing uncertainty on the political front, which is long been taking weigh on the economic situation in the country, whose foreign reserves are fast depleting and where the demand for the US currency is already beyond imagination as it has till now registered a mammoth rise against the US dollar since March last year.
The analysts and market gurus attribute the months-long losing streak and now a free-fall of Pak rupee to a series of issues which are shrouded in uncertainties on different fronts, foremost being the talks with IMF which started in Doha, Qatar today.
The market was already standstill as was evident from the Capital market’s snail’s pace development and crashing of the Stock market due to lack of clarity and direction from the new set-up and with the latest decision of Supreme Court, the markets have come to a total standstill with no silver lining on the horizon for the time being.
It is to be mentioned with concern that since April 11 when the new set-up took reign of the government, the rupee which was already continuously losing its values, continued it downward journey and further deteriorated and till now have lost more than 13 of its value against the US dollar.
As a matter of fact, economy prospers in the presence of a well-defined map laid down by the government, but the same is missing as the government is weighing in on all options before coming into action.
The market has continuously been reacting negatively to the continuously changing political situation in the country in recent months, and the government’s decision to keep prices of petroleum products unchanged is also quoted to be one of the factors along with shortage of dollars and depleting foreign exchange reserves of the country.
Moreover, the much-trumpeted talks with IMF team in Doha on May 18 to restore $6 billion extended fund facility are being followed with great interest by the business quarters as these talks what are termed as technical and policy-level talks which will continue till May 25, mainly aim for the revival of the Extended Fund Facility (EFF) programme. It means that the till then the uncertainty is going to prolong and hence the disastrous discourse by the rupee will continue.
The investors and currency dealers are attaching much importance to these talks as they say that with the successful outcome of these talks, the country will witness a currency inflow from friendly countries as well, but it the talks fail, loans programme will falter and it will badly impact the rupees value which is set for further low in the wake of the deepening economic woes that are upon us.
So it is three-prong crisis i.e., lack of direction and clarity on economic policies; dwindling foreign exchange reserves, and uncertainty on IMF loan bail-outs are what are the main reasons for the current downfall of the rupees’ value.
It may be mentioned here that the IMF’s pre-requisites for loan-bail out also aim at removal of subsidies and rise in prices of petrol, and electricity utilities but the new set-up did not pay heed to this due to public pressure as the rising commodity prices have already broken the backbone of the common man, who is running from pillar to post to make both ends meet.
However, some financial experts say that the new set-up will have to swallow the bitter pill and succumb to IMF pressure as there is no way out and they will have to move in accordance with the requirement of the international market where price-hike in oil and food stuff is order of the day. They say that because of the uncertainty regarding the IMF programme, other friendly countries will also stop funding our economy. In this backdrop, one does not see any silver lines on the horizons and can only wail over the losses made on economic front. It is saddening to note that few years back the Pak current traded under 100-mark again one US dollar.