Downtrend seen after IMF bailout delays; Stocks fall over 700 points
Karachi: The Pakistani rupee is down at least Rs 1.75 against the US dollar in the interbank market, hitting Rs 204.10 before midday on Monday.
The rupee had closed at Rs 202.35 against the dollar on Friday, according to the State Bank of Pakistan (SBP).
Similarly, the Pakistan Stock Exchange (PSX) touched a two-year low of 41,231, falling 784 points in the morning session.
On Friday, the stock market closed above 42,000 as investors remained optimistic about the upcoming budget announcement.
The volatility in the stock market and exchange rate came after a statement by Finance Minister Miftah Ismail on Saturday, in which he discussed a delay in reviving the International Monetary Fund’s (IMF) bailout package.
Budget numbers subject to ‘IMF deal’
Miftah had said the global moneylending institution may have a number of objections to the 2022-23 federal budget, which was presented in the National Assembly on Friday. Earlier, however, the minister said the IMF program was expected to resume after the budget.
The renewed uncertainties surrounding the rupee-dollar parity come despite a pledge from China to roll over a $2 billion maturing debt. Pakistan was supposed to repay the $2 billion to China in the current month of June.
The country’s foreign exchange reserves are depleted to a critically low level of six-week import coverage of $9.2 billion. An increase in reserves is necessary to stabilize the rupee and avoid a worsening of the international balance of payments crisis.
Last week, the Pakistan Stock Exchange (PSX) became the third worst-performing market in Asia, despite winning the title of Asia’s best-performing stock market in August 2020.