Monday, December 05, 2022

187 to one US dollar: Political crisis in Pakistan led to the free fall of its currency

The Pakistani rupee fell to a new low of Rs 191 against the dollar on Thursday as the country’s currency was rocked by continued political turmoil.

The rupee has been falling for months, but fell after opposition parties filed a no-confidence vote against Prime Minister Imran Khan in March, resulting in the dissolution of the national assembly last week.

The Pakistani rupee was trading at 186.28 in the open market today.

The Pakistani rupee has lost 18 per cent of its value against the US dollar since July 2021.

Relations with the US and the International Monetary Fund (IMF) are also important.

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Pakistan has received a $6 billion rescue package from the International Monetary Fund (IMF) to help tackle the balance of payments problem in 2019.

Traders’ advice causes panic in the market during periods of currency devaluation.

They persuade importers to buy more in a shorter period of time to meet their payment obligations, resulting in a shortage of dollars in the market.

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Also, they encourage exporters not to sell dollars and instead store them in anticipation of further depreciation, which will reduce greenback supply, according to Geo News.

Since the last 11 months, the rupee has been in a declining trend.

It has lost 23.58 per cent (or Rs 35.91) since its all-time high of Rs 152.27 in May 2021.

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(with inputs from agencies)

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