Pak currency plunges to 262 against dollar amid IMF aid uncertainty

Cash-strapped Pakistan’s currency depreciated to its lowest against the US dollar on Friday in the interbank and open market and closed at 262.6 rupees.
At one stage the currency depreciated to 265 rupees in the open market and 266 rupees in the interbank before making a slight recovery by the end of the day. According to the State Bank of Pakistan, when the market opened on Friday the currency fell by 7.17 rupees or 2.73 per cent from Thursday’s close.
The Pakistani rupee’s value has devalued by 34 rupees since Thursday in the interbank, the largest depreciation in both absolute and percentage terms since the new exchange rate system was introduced in 1999.
The Pakistani rupee has depreciated sharply after the government removed an unofficial cap on the USD-PKR exchange rate to revive the stalled International Monetary Fund (IMF) loan programme.
The government decision came on Thursday after the exchange companies announced the removal of a self-imposed rate cap in the open market.
The country needs to complete the ninth review of a $7 billion IMF programme that would not only lead to a disbursement of $1.2 billion but also unlock inflows from friendly countries and other multilateral lenders.
The IMF conditions include a market-based dollar-rupee exchange parity and high-interest rate and imposition of a 17 per cent general sales tax on diesel and petrol within a week.
The first two conditions have already been met.
According to data given by the Exchange Companies Association of Pakistan (Ecap), a substantial amount of remittances started flowing into the country through official channels on Friday.
Prime Minister Shahbaz Sharif expressed confidence on Friday that the IMF would release the funds by next month.
He said the government was in talks with the IMF to resolve the issue as soon as possible.