Pak rupee loses ground in fresh round of depreciation

Tariq Butt

The Pakistani rupee hit a new all-time low of Rs149.35 to the US dollar in the inter-bank market on Friday. This is the second successive day when rupee continued to lose ground against the greenback under the fresh round of depreciation.

On Thursday, the local currency lost 3.62% to close at Rs146.52 to the US dollar in inter-bank.

Cumulatively in the two days, the rupee has dropped 5.62%, or Rs7.96, from Wednesday’s close of Rs141.39.

Adviser to Prime Minister on Finance Abdul Hafeez Shaikh said that it is the State Bank of Pakistan’s (SBP) monetary policy committee which is responsible for determining rupee-dollar exchange rate keeping in view the foreign currency demand and supply situation of the country.

Experts said the drop in rupee was expected, as the government had agreed to leave inter-bank market free from state control under the International Monetary Fund (IMF) 39-month loan programme with $6 billion for Pakistan. The government signed the loan programme on Sunday.

The IMF had conditioned to let the market forces decide rupee-dollar exchange rate going forward. Implementation of this condition was a must to convince the IMF board to give it’s final approval for the programme.

There was speculation in the market the rupee may drop to 165-170 to the US dollar under the current cycle of depreciation.

Earlier, the center bank had let the rupee depreciate by a staggering 34% to 141.4 since December 2017.

The cabinet members are unaware of the details of the government’s deal with the International Monetary Fund (IMF), said a report quoting ministers.

Neither the federal cabinet was briefed about what the IMF deal on bailout package for Pakistan contains nor have most cabinet members any idea of what conditions are attached with the Pak-IMF agreement.

“We don’t know what’s in the IMF deal,” a federal minister said. When asked if the cabinet was briefed about what has been agreed between Pakistan and IMF, he replied, “No.”

Minister for Science and Technology, Fawad Chaudhry said the cabinet was not in the know of the IMF deal and added the ministers have not yet been given the briefing on the subject.

He said that the cabinet may be taken into confidence in its next meeting. He said the ministers should be briefed on the subject. He added the deal has not been formally signed as yet so the cabinet ministers are expected to be informed before the IMF board approves it.

Another minister said he has no idea what is in the IMF deal but added that the cabinet members and official spokespersons were told to defend the agreement in their media interactions and in the TV talk shows.

Prime Minister’s Special Assistant on Media Iftikhar Durrani said he was not aware of the deal because he could not attend the last two meetings of the cabinet. He said the Minister of State for Finance Hammad Azhar would be in a better position to explain this.

While the opposition political parties demand of the government to share with Parliament the details of the IMF deal, now it is found that even the cabinet, which is the top decision making body, was neither consulted during the IMF talks nor taken into confidence when the IMF has already announced the agreement was reached between the two sides.

Meanwhile, leader of the opposition in the National Assembly and Pakistan Muslim League-Nawaz (PML-N) President Shahbaz Sharif has said the kind of “dictation” the Imran Khan government was taking from the International Monetary Fund (IMF) was unprecedented.

“This is Khan’s new Pakistan,” Shahbaz Sharif, who is in London for the past few weeks in connection with his treatment, told Geo News.

He said all the reports regarding delay in his return from London were baseless, adding that he intends to come back before the budget session of the National Assembly.

The opposition leader said he was waiting for his medical reports to be issued before he heads back to Pakistan.

Criticising Khan, he said everybody knows “selected prime minister” Imran Khan has no understanding and idea of how the work is done. He said he has not seen liar like Imran Khan in the prime minister’s office.