The Pakistani rupee fell from 115.63 at the start of last week to its lowest value ever of 121.39 against the US dollar by day-end on Thursday, ahead of the Eid holidays.
This is the third fall of the Pakistani currency in the past six months. In December last year, the rupee fell below the 110 mark for the first time in history, with the then finance minister Ishaq Dar engulfed in corruption cases.
Officials close to Dar told Asia times that the former Pakistan prime minister was behind maintaining the rupee’s artificial value around the 100 mark. “He always said 100 is a psychological number, and we should make sure that the rupee doesn’t fall too far below that,” a former aide of Dar told Asia Times. This ensured that the rupee fluctuated around the 100 mark for the most part of Dar’s five-year tenure as finance minister.
The rupee then crossed the 115 mark in March this year after the State Bank of Pakistan (SBP) cut support, bringing the currency closer to its actual value. It was hoped that the move would help increase exports and address Pakistan’s $10 billion current account deficit.
However, with no significant impact on exports over the past three months, the SBP was pushed to address the relentless pressure on the country’s foreign currency reserves. “The market-based adjustment is reflective of the country’s external balance of payments position which is under pressure due to a large trade deficit,” a statement issued by the central bank read.
Former caretaker finance minister Salman Shah believes there might be more devaluation of the rupee, but says that most of it has taken place.
“The central bank is no longer supporting the rupee and its value reflects the demand and supply situation. So the devaluation will stop once the rupee reaches its true value. And I think most of the pressure has now been released,” he told Asia times.
Shah also believes that the Eid holiday period can actually provide some respite to the local currency. “There is usually an uptick of remittances around Eid. So we’ll have to wait and see,” he said. However, the wider consensus among analysts is that the rupee will drop further.
Most of these predictions cite the hefty imports bill that Pakistan has to pay. Senior financial journalist and analyst at FX Empire Shahab Jafry agrees that the rupee will continue to slump. “Traders had seen it coming, because the central bank is no longer supporting the rupee when there is excess demand for the dollar,” he told Asia Times. “Instead of increasing imports, it inflated the debt payments. The only options for the government is a massive loan or massive investment.”
When asked, government officials confirmed that the imports from China, as part of the economic corridor with Pakistan, form a bulk of the imports bill. Salman Shah suggested that the government needs to better schedule its bills. “Scheduling import bills in the longer-term can help avoid a further slide. The government needs to improve its debt management and extend its maturity structure. And it’s time to make sure that the projects being invested in start giving returns.”
While another bailout appears to be the only way out for the economy, the current caretaker government has ruled out talks with the International Monetary Fund (IMF) for a bailout program. Finance ministry insiders also reveal that Pakistan is “far behind schedule” in its international debt obligations owing to the balance of payment crisis.
Being a former caretaker finance minister himself, Shah conceded that it was difficult for the government to take any long-term measures. “It’s difficult for the caretaker set-up to do much. But yes, they are taking away the artificial support. Maybe they can look for short-term bolstering of reserves by seeking financing from China and improve the CPEC terms and conditions,” he says.
Shahab Jafry says a short-term solution could actually end up helping Pakistan in the long-run. “Whoever gives out the loan will demand austerity, [ask for] more interest rates and will demand that the rupee be moved towards its actual value,” he believes.
Muhammad Fayyaz Pakistain. Dont worry about Inmdia, worry about your failed state
Syed saheb kashmir has hindu religious sites from before Islam’s arrival in India. We were happy with an independent Kashmir in 1947 but Pakistan invaded it after which it acceded to India.wahabi radicalization destroyed the Sufi culture in Kashmir leading to Hindu genocide and migration under Pakistan supported insurgency as a part of its covert and asymmetric warfare.it was and will remain part of India because we dont want another Syria /Afghanistan at our doorsteps. If we leave there will be no azadi but pakistan will move in and the LoC will move inwards.hence this strategic mistake will never happen.
Syed Abbas please sort out shia/Sunni problems, provide safety to ahmadiyas, ethnic baloch and hazaras. Let christian, hindu and sikh minorities survive in pakistan and then preach to India. Ask the Chinese to spare the Tibetans and not use political dissidents for organ harvesting and then preach to us.
Rohit Pandeya
1. My condescending attitude towards caste-obsessed India is justified. The fundamental question of Existence is Survival, Growth, Evolution, and man finds answers to this based on his/her environment, physical and ideological. Ancient Hinduism was the right response for Agrarian era but was hijacked by Aryans who introduced race based caste. Mohammedanism is the right answer for Trading era, that is why present Hindus are nationalists (tied to land) but Mohammedans are not. Iqbal reminded us that China, India, all world belongs to believers. In coming era of Globalization and Trade that is being led by China and BRI, Pakistanis is in, but Indians not.
2. There may not be Allah/Bhagwan in China, but there is Reason – Confucianism, and also a more humane version of Hinduism – Buddhism that India expelled. Mohammedans can deal with China but Hindus can not.
3. As far as "disputed territory" I have explained elsewhere that Kashmir does not belong to India or Pakistan, but to Kashmiris. If Hindus can ask for freedom from the English, the Sinic Kashmiris who are neither Muslim nor Hindu (Shia and Buddhists) can ask for freedom both from Muslims and Hindus. If Hindus and Muslims want to fight each other with Nukes, that is ok with me. But leave Kashmiris alone. As Gandhi well said to the English "you are masters in others’ house" as India and Pakistan are in Kashmir.
4. I agree that there are good and bad people everywhere, and good ones cooperate. Lucknow is not Muslim, but Mohammedan (Shia). While Hindus and Muslims have been at each others’ throats for 1,000 years, the Shia and Hindus allied themselves under Begum Hazrat Mahal. Aurangzeb was a Muslim not a Mohammedan. (Google for what we Syeds are).
Syed Abbas in a nation of 1.3 billion people you manage to pick the needles in the haystack. for one religious intolerance i can give you hundreds of incidents where hindu and muslims live together as brothers. there are muslims partaking bhandara(community eating) on bada mangal(Tuesday) in Lucknow and muslims coming for iftaar at their hindu friends house while we go to their house for Eid.the recent murder of an indian soldier, while he was unarmed and on leave going to his home for Eid, was an eye opener which falsified the claim about your brotherhood. he didnot blink in the eye of death as they tortured him and killed him for being an INDIAN.
Syed Abbas as per the chinese there is no Allah and no Bhagwan…they are only concerned about resettling 30 million young men from poor strata who cannot get married in China, due to its one child policy and male centric population as in all asian countries.so they are trying to resettle this population outside their own country, Pakistan is one good spot. strategic and political move by the chinese to colonise your land. Our only concern is that the CPEC passes through a disputed area, beyond that what happens in CPEC is not a cause for us to pray in temples. God only listens to those who have big armies and that is why pakistan is in cahoots with a godless nation all the while declaring themselves as the sword of islam and defenders of faith ..what hypocricy, its just two enemies joinging together against a common foe. the older generation which had links to pakistan pre -Partition is gone and the newer ones have no love lost so we are only concerned where it affects our own security concerns. beyond that CPEC is nothing for us. so dont berate India and its religion. what you reap is what you sowed in the past.
Syed Abbas pakistan rahe ya na rahe is not my concern. what i don’t like is your condescending attitude towards India. i dont care what happens to pakistan, its not my concern. your articels are like the horns of a stag, a point here and a point there with a lot of bull in between. little knowledge is indeed a dangerous thing.
Vikram Reddy
Lol it looks like you can not address the technical points raised in my post, so you beat around the bush with homilies and wishful thinkings.
But intolerance happens in India more than other places – destroying churches and mosques and killing people by wrongly accusing them of having beef in their fridges. What other country could have a PM who was for 10 years on world terrorist list?
There are extremists everywhere – even here in US/Canada, but India seems to have too many of them. Why can you not learn to live among yourselves peacefully? 3,500 years ago you decided to split your society in castes and weaken yourself. Ever since every foreigner has been able to screw you – Greeks, Arabs, Afghans, Turks, Iranians, Mongols, and finally Europeans. Even after 70 years of "freedom" you have not learnt that a house divided can not progress.
Leave Pakistan and Kashmir alone.
Aditya Shetty
What good is money under your bed? Only 2 months reserve means that money is being used.
My great great grandfather Ali bin Abi Talib (the father of 40,000,000 Syeds today) was a Muslim leader in 7th century. He used to empty Govt Reserves every night clean by distributing money what was leftover so that money could be circulated, not hoarded. 2 months reserves is 2 months too much. Get the point? Your attitude is too much tied to the Western Capitalist System that is why you can not compete against China.
Syed Abbas Careful bud, you have just caused blasphemy by saying a hindu God cares for muslims. Extremist crowd might chase you like a dog. Darn it….commies love to eat dogs.
Dhroov Navadia Agree. Lets make our country great again, no pun intended. We have a great tradition handed down from Maurya, Gupta golden era.
Syed Abbas your fo ex reserves is good for 2 mos..less than the basic 3..china just gave u 1.5 billion 4 mos ago..your skinny old islamic ass is worth zero at this point..unless its got a allah IED in it. I would start selling your ports airports mums sisters and lil brothers for yuan.
Go back to eating dogs, unclean
Perry Kamath
Good point.
Our Indian friends do not realize that Chinese BRI is 500 TIMES bigger than CPEC, a mere $60 billion. It is a 26 Trillion $ program over next 10 years encompassing 60 nations.
$60 Billion is simply learning money. The lessons Chinese learn with Pakistan in a forgiving environment will be very valuable in saving them trillions later. As an investor Chinese can afford to lose it all in worst case scenario that our Indian friends would deeply like to see and are praying in their Hindu temples that it happens. But Allah/Ishwar/Bhagwan does not only care about Hindus but also Muslims and Chinese whom He created.
So much hatred! Shame on you bringing your family and daughter into your job as a MI5 troll!