Pakistani rupee plunges to record low against dollar

By Aamir Latif

KARACHI, Pakistan (AA) - Pakistani rupee on Tuesday plunged to a record low of Rs 138 against the U.S. dollar, as the government decided to approach IMF for a bailout program to prop up the country’s dismal economy.

The value of the dollar shot up by Rs 11.70 bringing a historical high of Rs 138 before it slightly dipped to Rs 136 and Rs 134 in the open and the interbank markets respectively at the close of the business, according to the foreign exchange dealers.

But the worst is still to come as Minister for Ports and Shipping Ali Zaidi told reporters that the dollar is likely to hit Rs 140 in days to come.

Malik Bostan, chairman of Pakistan Forex Association, said the dollar traded at Rs 124-125 at the beginning of the day but it fell by 12 percent -- highest ever in a single day -- in next few hours amid rising fear of further inflation, and hike in the prices of essential commodities.

The key reason behind a perpetual devaluation, Bostan told Anadolu Agency, was depreciating foreign reserves that had left the central bank with no power to control the rate.

The government said it has foreign reserves of $8 billion sufficient for only six weeks.

Tuesday’s drop marks the fifth consecutive devaluation of the currency -- one of the worst performers in Asia -- since December 2017. The latest devaluation coincides with a recent increase in gas prices -- the two major conditions reportedly demanded by the IMF in exchange for a bailout program.

On Monday, Finance Minister Asad Umar announced the government had decided to approach the IMF for a bailout package to help hold up the country’s increasing budget deficit, and mounting balance of payments crisis.

Apart from the IMF, the Pakistan Tehreek-i-Insaf (PPTI) government is seeking aid and loans from its longtime strategic partners -- Saudi Arabia and China -- to prop up its depleting foreign reserves.