The performance of Pakistani rupee (PKR) has been marked as worst in the whole Asia for the year 2022 with a decline of around 16.5 percent against the United States Dollar (USD) amid prevailing uncertainty. It has placed PKR at the bottom of the basket of 13 peers, including the Japanese Yen, South Korean Won, and Bangladesh Taka.
Since June 8, due to the persistent delay in revival of the International Monetary Fund (IMF) bailout program and rapidly declining foreign exchange reserves, the rupee has fallen by 5.1 percent. This situation has badly affected the economy that also experienced the change of government during the first half of the year.
Read more: Pakistani Rupee: Best performer becomes worst performer
The rupee closed at 211.48 in the interbank market on Tuesday, quite far from the 176.51 it settled at on December 31, 2021.
Data complied by the Business Recorder showed that the the Pakistani currency was closely followed by the yen (15% decrease), won (8.1%) and the taka (7.22%). In comparison, the best currencies which lost the least value against the USD were, Hong Kong Dollar, Singapore Dollar, and the Indonesian Rupiah.
Read more: Pakistani rupee slumps to 190 against USD
Widening current account deficit, rapidly declining State Bank’s reserves and a persistent delay in revival of the International Monetary Fund (IMF) bailout program are the major factors behind the deterioration of rupee’s value.
While the new regime began discussions with the IMF, the talks between these two ended with no fruitful conclusion on reviving the stalled Extended Fund Facility (EFF).
Instead, the IMF stated in its statement that deviance from the policies conformed upon in the previous review necessitate the immediate implementation of concrete policy actions, along with the elimination of fuel and energy subsidies in the FY2023 budget, to accomplish program objectives.
In an attempt to meet the conditions, Pakistan has stepped on a challenging economic path requiring bold measures, massive increase in fuel prices, withdrawing subsidies on power tariffs, amid record high level of inflation, and slower economic growth.
Finance Minister Miftah Ismail was hopeful that the IMF program would revive in coming days which would stabilize the economy. As a consequence of his statement and some other rumors, strengthened the country’s stock exchange with the KSE-100 Index posting a 1.8% rise on Tuesday. However, the rupee still dropped, posting its eight consecutive losses against the US dollar.
The IMF program is seen as pivotal for Pakistan and it has been widely believed that this would pave way towards lending sources and help restore the country’s dwindling foreign exchange reserves which have dropped by more than half in last 10 months.