Rupee tumbles by Rs19 against dollar in interbank amid IMF delays – Business

The Pakistani rupee sank sharply by Rs18.98 against the dollar as trading closed on Thursday, with the local currency reaching a historic high of Rs285.09 at close, according to the State Bank of Pakistan.

Analysts attributed the record drop — which is 6.66pc — to the government’s impasse with the International Monetary Fund (IMF).

sliding in recent days after delays in a deal between Pakistan and the International Monetary Fund, which they have been negotiating since early last month.

A move to a market-based currency exchange rate regime is one of a list of actions the IMF wants Pakistan to complete to clear its 9th review, which if approved by its board would release a funding tranche of over $1 billion that has been delayed since late last year over a policy framework.

The prerequisites by the lender are aimed at ensuring Pakistan shrinks its fiscal deficit ahead of its annual budget around June.

Pakistan has already taken most of the other prior actions, which included hikes in fuel and energy tariffs, the withdrawal of subsidies in export and power sectors, and generating more revenues through new taxation in a supplementary budget.

The fiscal adjustments demanded by any deal, however, are likely to further fuel record high inflation, which hit 31.5pc year-on-year in February.

Bilateral and multilateral external financing commitments and raising policy rates are two other demands by the IMF that Pakistan is yet to meet.

Longtime ally China is the only country that has refinanced $700 million to Islamabad.

Pakistan’s central bank is widely expected to raise its key policy rate by 200 basis points in an off-cycle meeting on Thursday, a Reuters poll showed.

Additional input by Reuters

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