Country’s economy was facing a number of issues when Pakistan faced worst flood of its history. Pakistani rupee faced historical depreciation recently. But, the government’s decision for streamlining the issues of the economy succeeded and a visible strength in Pakisani rupee was observed. But, just after that the country was badly hit by flood. The current situation caused by the flood and political instability in the country has once again badly impacted the economy. The rupee is continuously going down against Dollar again. The Pakistani rupee’s free fall continued against the US dollar on Monday amid the persisting political turmoil in the country and the global strengthening of the greenback. The rupee depreciated 1.26 or 0.57% to 221.92 against the dollar in the interbank market, up from Friday’s close of 220.66, according to data from the State Bank of Pakistan (SBP). The US dollar climbed to a 20-year high against other major currencies on Monday after Federal Reserve Chair Jerome Powell signalled interest rates would be kept higher for longer to bring down soaring inflation.
Pakistan is one of those countries which have been derailed from the way of progress and development due to the coronavirus. Country’s economy is continuously going down. Rupee devaluation is a clear indicator of economic downfall. When Pakistan Tehreek-e-Insaf (PTI) was ruling the country then the united opposition was of the view that the policies of the government are responsible for the price hike and rupee devaluation. The former PM Imran Khan kept on telling the nation and other parties that rupee is going down due to the international phenomenon. But, no one was ready to accept this mantra. However, after coming in power the new government is also facing the same situation and is now accepting the fact that price hike and other issues of rupee are due to the international phenomenon after the coronavirus pandemic.
There are a number of reasons due to which rupee is continuously devaluing against Dollar. However, currency dealers believe that a delay in the IMF programme, lack of immediate financial support from friendly countries, depleting foreign exchange reserves and surging trade deficit kept the pressure on the domestic currency. The new government’s reluctance to remove subsidies on fuel and electricity which are the pre-conditions for the revival of the IMF programme dampened investors’ sentiment. Moreover, investors are concerned about the falling foreign currency reserves as the inflows from remittances and export proceeds are not sufficient to meet the market demand — and growing external debt payments and soaring imports. This is putting pressure on the rupee.
There is also ambiguity over the financial support from Saudi Arabia, UAE and China. The political temperature was also rising following the former Prime Minister Imran Khan’s announcement that he would march with his supporters to Islamabad after May 20 to demand new elections.
Country is currently facing the political instability and flood. Rupee is continuously going down, but the rulers are not taking interest in this regard. They are busy in doing politics. The continued devaluation of rupee is a great threat. Government should realize it and should work for stabilization of rupee instead of utilizing its energies for political activities. Work should be done to stabilize the rupee against Dollar to ensure the betterment of the economy.