Pakistan’s currency hit a record low as the crisis-stricken government gave up control to get important loans from the IMF.
The PKR hit a record low against the dollar on Thursday in the interbank market, falling by Rs 24.54 from Wednesday’s closing to Rs 255.43.
Pakistan is battling to emerge from a growing economic crisis. The Exchange Companies Association of Pakistan informed the news agency that it was lifting the price ceiling to lessen currency volatility.
According to the forex markets, the currency cap generated “artificial” inefficiencies and a black market. US cash sold for more money in black. The rupee lost value and fell to Rs 252.5 in early open market activity.
Financial institutions asked Mohammad Ishaq Dar, the finance minister, to quit “managing” the rupee’s parity with the dollar as the nation’s foreign exchange reserves steadily decreased.
The decision to eliminate the currency cap has well received by Pakistan’s markets. The benchmark index of the Pakistan Stock Exchange surging by 1.77%. The rupee is able to appreciate its true value versus the dollar if the price cap lifted.
Karachi-based AKD Securities Pvt Ltd.’s chief operating officer, Naveed Vakil, told Bloomberg: “The IMF is fully committed to Pakistan maintaining a market-based currency rate, and today’s action has given markets the confidence that authorities now fulfill the remaining requirements to continue the IMF program,”
With a high rate of inflation, the nation has been experiencing a crisis parallel to that experienced by Sri Lanka. To combat rising inflation, the central bank raised the benchmark interest rate to 17%, the highest level in 24 years.
