Karachi: Pakistan’s finance minister blamed the rupee’s slide on political turmoil, saying he expects market jitters over the currency's sharp decline to subside soon. “The rupee downturn is not due to economic fundamentals,” finance minister Miftah Ismail said. “The panic is primarily due to political turmoil, which will subside in a few days.”
The rupee continued to fall, despite last week’s staff level agreement reached with the IMF that would pave the way for a disbursement of $1.17 billion under resumed payments of a bailout package.
The rupee was trading at 225 per dollar, having ended at 221.99 after Fitch ratings agency revised its outlook for Pakistan’s sovereign debt from stable to negative - though it affirmed Long-Term Foreign-Currency and Issuer Default Rating at “B-”. “There is panic in the market, I fear it (the rupee) will go down fur-
ther,” Zafar Paracha, secretary general of the Exchange Companies of Pakistan, said.
Paracha said he did not see any reason for the depreciation in the rupee other than possible IMF pre-conditions. Neither the government nor the IMF have said anything about the need for any further depreciation of the currency, though Pakistan recently adopted a market-based exchange rate under IMF’s advice.
The FM said imports, which put pressure on the rupee, have been curbed and the current account deficit has been controlled in the first 18 days of June
Pressure on the rupee will ease moving forward, he said, adding that Pakistan had already worked out sources to meet its financing gaps.