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  • Rupee witnesses biggest fall in over 24 years as Pakistan moves to meet IMF condition for bailout deal


Rupee witnesses biggest fall in over 24 years as Pakistan moves to meet IMF condition for bailout deal

A currency trader counts Pakistani Rupee notes as he prepares an exchange of US dollars in Islamabad, Pakistan on December 11, 2017. (REUTERS)
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Updated 26 January 2023
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Rupee witnesses biggest fall in over 24 years as Pakistan moves to meet IMF condition for bailout deal

  • Pak rupee fell by around 9.61 percent or Rs24.53 in the interbank market on Thursday
  • A market-based exchange rate is one of the conditions the IMF has set before it agrees to unlock a stalled bail-out program for Pakistan
Updated 26 January 2023
KHURSHID AHMED   

KARACHI: Pakistan’s national currency on Thursday witnessed its biggest fall in a single day in over 24 years, as it depreciated by over 9 percent against the US dollar, as Pakistan moves to meet the International Monetary Fund's (IMF) conditionalities to resume a stalled $7 billion bailout program, dealers and analysts said. 

The rupee closed what transpired to be one of the most volatile trading sessions of the year at Rs255.43 against the greenback. The national currency witnessed massive depreciation of around 9.61 percent, or over Rs24.53 in the interbank market, according to data released by the State Bank of Pakistan.  

Pakistan's rupee previously saw such a massive single-day depreciation back on October 26, 1998, when it depreciated by 9.9 percent against the US dollar, according to Arif Habib Limited research. 

“The much-awaited PKR adjustment has been done today by allowing banks to quote rates based on market demand-supply,” Muhammad Sohail, CEO of Topline Securities, told Arab News. 

Sohail said this was also the case till September 2022 when the bank rate was kept in a narrow band that gave rise to the black market. He expects the move will now pave the way for the revival of the stalled IMF program.  

“Now the black market rate will come closer to the bank rate," he said. "This will help in increasing exports and inward remittances through the banking channel. This may also help in reviving the delayed ninth review with the IMF and inflows from friendly nations," he added.    

During the intra-day trading, Pakistan's rupee plunged as low as Rs259.75 for selling and Rs254.75 against the greenback as  Pakistani authorities apparently allowed the currency to adjust itself according to the market demand and supply requirements.   

The currency also recorded a massive free fall in the open market where it depreciated by Rs19.4 to Rs260 for buying and Rs19 to Rs262 for selling against the greenback, according to the Exchange Companies Association of Pakistan (ECAP). 

The ECAP said late on Tuesday it was lifting the cap on the currency in the interest of the country.

Moving away from the managed exchange rate to free float was meant to discourage the prevailing three different rates to assess the dollar's value: the state bank’s official rate, the one assessed by the foreign exchange companies and the black market rate. 

“Today was a historic day for the open and interbank market as the currency devaluation has made a fresh record,” ECAP Secretary General Zafar Sultan Paracha told Arab News. 

However, he said the move could not discourage the black marketing of the dollar. Paracha said exchange companies were already selling the dollar to banks through credit cards at Rs255, indicating that the currency was likely to depreciate to this level. 

The move toward a market-based exchange rate takes Pakistan one step closer to the revival of a stalled bailout program as it is one of the conditions that the IMF has set before it agrees to unlock more funds. Previously, against IMF advice, Finance Minister Ishaq Dar has tried to defend the rupee, including currency market intervention. 

Pakistan’s national currency has been under immense pressure due to a higher demand for import payments amid a forex crisis, with reserved held by the central bank now falling to $4.6 billion, barely enough to cover three weeks of imports.  

The low reserves have compelled the government to restrict the import of goods, including industrial raw materials, to stop dollar outflows, while commercial banks have stopped issuing letters of credit (LCs), leaving importers struggling to arrange the greenback for already placed orders.  

Analysts said the IMF wanted Pakistan to use a market-determined exchange rate rather than keep it artificially managed.  

“IMF wanted Pakistan to have market-determined rates, electricity and gas tariff hikes, and a minibudget as preconditions to revive the stalled program,” Tahir Abbas, Head of research at Arif Habib Limited, told Arab News. 

“Today’s move seems that the country is meeting IMF conditions. It is now expected that the fund program will be resumed next month.”  

Analysts said the move to further liberalize the currency market would fuel inflation in the country which currently hovers around 24 percent. 

“The currency depreciation is likely to fuel inflation in the country and we expect that rate measured by the consumer price Index would hit 30% in the coming months,” Samiullah Tariq, Director Research at Pakistan Kuwait Investment Company, told Arab News.  

Pakistani analysts expect the currency depreciation would continue and rupee would likely hit Rs270 against the greenback by end of the current fiscal year. 

“We maintain our exchange rate forecast and expect PKR-US$ exchange rate to trade close to Rs270 by June 2023 in the interbank market,” Topline Securities said in its report on Thursday. 

Topics: Pakistan

Pakistan warns Indian suspension of Indus Waters Treaty could set precedent for China

Updated 8 sec ago
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Pakistan warns Indian suspension of Indus Waters Treaty could set precedent for China

  • New Delhi suspended the river-sharing agreement after a militant attack in Indian-administered Kashmir
  • PM Sharif’s aide says Pakistan is discussing the situation with friendly countries and the United Nations
Updated 8 sec ago
Hasaan Ali Khan

ISLAMABAD: India’s suspension of the Indus Waters Treaty (IWT) could set a precedent for China to block the Brahmaputra River, a senior aide to Prime Minister Shehbaz Sharif warned on Friday, potentially putting New Delhi in a difficult position.
India relies on rivers that originate in China, particularly from the Tibetan Plateau, where major waterways like the Brahmaputra and Sutlej rivers begin.
China’s dam-building activities and lack of a formal water-sharing agreement have raised concerns in India about future water security during floods or droughts. The absence of binding treaties leaves India vulnerable to upstream decisions made by Beijing.
In 2016, China blocked the flow of the Xiabuqu River, which feeds the Brahmaputra, as part of a hydropower project in Tibet after a militant attack in Indian-administered Kashmir.
“If India does something like this that they stop the flow [of rivers] to Pakistan, then China can also do the same thing,” Rana Ihsaan Afzal said while speaking to Geo News. “But if things like this happen then the entire world will be in a war.”
The IWT is a landmark water-sharing agreement signed in 1960 between India and Pakistan, brokered by the World Bank, to manage the use of rivers flowing through both countries from the Himalayas. Under the treaty, India was granted control over the three eastern rivers — Ravi, Beas and Sutlej — while Pakistan received rights over the three western rivers — Indus, Jhelum and Chenab.
Despite multiple wars and ongoing tensions, the treaty has largely held as a rare example of sustained cooperation.
However, India on Wednesday suspended the six-decade-old river-sharing treaty with Pakistan as part of a series of measures following a deadly militant attack in Indian-administered Kashmir, for which it holds Islamabad responsible.
Pakistan has denied any involvement in the attack, in which gunmen killed 26 people at a tourist site in Pahalgam, a scenic town in Anantnag district, marking the deadliest assault on civilians in the country in nearly two decades.
Highlighting that India’s actions threatened the food security of 250 million people, Afzal said under international water laws, upper riparian countries cannot “stop” water but may only “regulate” it.
He added that upper and lower riparian countries coexist peacefully across the world and warned that India’s threat could undermine the entire system of peaceful water-sharing mechanisms, potentially escalating tensions toward conflict.
“This will not be easy at all,” he said. “The United Nations and lower riparian countries throughout the world will raise their voice against it.”
Afzal confirmed that Pakistan was engaging friendly countries through diplomatic channels and was also in contact with the UN.

Topics: Indus river Pakistan India

Pakistan PM hails negative SPI inflation, says economic indicators improving

Updated 53 min 4 sec ago
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Pakistan PM hails negative SPI inflation, says economic indicators improving

  • SPI focuses on short-term price movements that affect low- and middle-income households most directly
  • Shehbaz Sharif says the government wants to pass on the benefits of improving economy to the public
Updated 53 min 4 sec ago
Arab News Pakistan

ISLAMABAD: Prime Minister Shehbaz Sharif on Friday expressed satisfaction over the annual decline in Pakistan’s Sensitive Price Index (SPI), which he said had fallen to -3.52% in April 2025, compared to 26.94% in the same month last year.
The SPI measures weekly changes in the prices of essential items such as food, fuel and utilities across various consumption groups. Unlike the broader Consumer Price Index (CPI), which captures overall inflation, the SPI focuses on short-term price movements that affect low- and middle-income households most directly.
“The [SPI] rate stood at 26.94% in the same month last year, whereas in April 2025, it has been recorded at minus 3.52%,” the prime minister said in a statement issued by his office.
“The country’s economic indicators are improving with each passing day,” he added. “The government is making every effort to ensure that the benefits of these improving economic indicators reach the public.”
Sharif also commended his economic team for their efforts in stabilizing the economy and curbing inflation.​
In May 2023, Pakistan experienced its highest recorded inflation, with the CPI reaching 38% year-on-year, driven by surging food and energy prices.
The recent decline in the SPI indicates potential relief for consumers,​ though the government continues to face challenges in managing the economy, including meeting fiscal targets and securing external financing.

Topics: Pakistan Prime Minister Shehbaz Sharif Pakistan economy

VISA to triple Pakistan office size, partner with 1-Link, PayPak — finance minister

Updated 25 April 2025
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VISA to triple Pakistan office size, partner with 1-Link, PayPak — finance minister

  • Muhammad Aurangzeb hails company’s role in advancing digital payments and financial inclusion
  • The finance minister also assures the US financial services company of the government’s full support
Updated 25 April 2025
Arab News Pakistan

ISLAMABAD: Finance Minister Muhammad Aurangzeb said on Thursday US financial services company Visa will triple the size of its office in Pakistan and collaborate with the country’s first-ever domestic payment card scheme, 1Link and PayPak.
Visa Inc. is a global payments technology company that operates one of the world’s largest electronic payment networks, enabling consumers and businesses to make payments using Visa-branded credit, debit and prepaid cards.
Visa doesn’t issue cards itself but partners with banks and financial institutions to do so. 1Link and PayPak is similar in concept to Visa or Mastercard but is designed specifically for local use within Pakistan.
The Pakistani minister, currently in Washington, appreciated Visa’s role in the digitalization of his country’s economy during a meeting with the company’s regional vice president, Andrew Torre.
“He [Aurangzeb] noted that Visa’s decision to triple the size of its office in Pakistan and its collaboration with 1Link and PayPak would contribute significantly to promoting financial inclusion, e-commerce, transaction security, and payment gateways in Pakistan, as well as facilitate remittances,” the finance ministry said in a statement issued after the meeting.
It added the finance minister also assured the company of the government’s full support in resolving any issues faced by them.
Aurangzeb’s meeting with Torre came as the country works toward a more inclusive and digitally empowered economy, with government backing and private sector innovation aligned.

Topics: Finance Minister Muhammad Aurangzeb

Pakistan Senate rejects Indian attempt to link it to Kashmir tourist attack

Updated 25 April 2025
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Pakistan Senate rejects Indian attempt to link it to Kashmir tourist attack

  • Deputy PM Ishaq Dar says India must be held accountable for its acts of ‘terrorism’ in Pakistan
  • He also reaffirms Pakistan’s ‘moral, political and diplomatic’ support to the people of Kashmir
Updated 25 April 2025
Usama Iqbal Khawaja

ISLAMABAD: Pakistan’s Senate on Friday unanimously passed a resolution condemning what it called India’s “frivolous and baseless” attempts to link Islamabad to a deadly shooting in the disputed Himalayan region of Kashmir, rejecting the allegation and accusing New Delhi of using “terrorism” as a political tool.
India has blamed Pakistan for the attack in the scenic town of Pahalgam in Kashmir’s Anantnag district, where gunmen killed 26 civilians on Tuesday in the deadliest assault on non-combatants in nearly two decades.
Pakistan has denied any involvement in the incident, with Deputy Prime Minister Ishaq Dar reading out the resolution in the upper house of parliament that was later adopted by all the lawmakers.
“The Senate of Pakistan condemns terrorism in all its forms and manifestation, emphasizes that killing of innocent civilians is contrary to the values upheld by Pakistan [and] rejects all frivolous and baseless attempts to link Pakistan with the Pahalgam attack of 22nd April 2025 in Indian Illegally Occupied Jammu and Kashmir,” he said.
The resolution denounced India’s suspension of the decades-old Indus Waters Treaty and reaffirmed Pakistan’s support for the Kashmiri people’s right to self-determination.
It also accused India of waging a “mala fide campaign” to malign Pakistan.
“The country’s sovereignty, security and interests demand that India should be held accountable for its involvement in different acts of terrorism and targeted assassinations on the soil of other countries, including Pakistan,” Dar continued.
He also reaffirmed Pakistan’s “unwavering moral, political and diplomatic support for and commitment to the Kashmiri people’s just struggle for realization of their inalienable right to self determination.”

Topics: Senate of Pakistan Deputy Prime Minister Ishaq Dar Pakistan India Ties

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Detained Pakistan rights activist Dr. Mahrang Baloch launches hunger strike

Updated 25 April 2025
AFP
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Detained Pakistan rights activist Dr. Mahrang Baloch launches hunger strike

  • Baloch, 32, was arrested last month on charges of terrorism, sedition and murder
  • Dozen UN experts called on Pakistan in March to immediately release Baloch rights defenders
Updated 25 April 2025
AFP

QUETTA: Detained activist Dr. Mahrang Baloch, one of the leading campaigners for Pakistan’s Baloch minority, has launched a hunger strike along with other detainees, her sister told AFP on Friday.
Mahrang Baloch, 32, was arrested last month on charges of terrorism, sedition and murder.
In her native Balochistan, an impoverished province that borders Afghanistan and Iran, security forces are battling a growing insurgency.
Rights groups say the violence has been countered with a severe crackdown that has swept up innocent people. Authorities deny heavyhandedness. 
Mahrang’s hunger strike “is aimed at denouncing the misconduct of the police and the failure of the justice system to protect... prisoners,” her younger sister, Nadia Baloch, said.
Nadia said the hunger strike was launched on Thursday after the attempted “abduction” of one of the Baloch detainees.
Mahrang’s organization, the Baloch Yakjehti Committee (BYC), said the inmate was beaten by security officials and taken from the prison to an unknown location.
A security official said the detainee was moved to another prison and denied any mistreatment.
BYC said four other detained Baloch activists have joined the hunger strike.
“All of them are peaceful political workers, imprisoned for raising their voices... Their only ‘crime’ is organizing peacefully in an environment saturated with state terror and violence,” the group said.
Activists say in the crackdown against militancy in the region authorities have harassed and carried out extrajudicial killings of Baloch civilians.
Pakistani authorities reject the “baseless allegations.”
A dozen UN experts called on Pakistan in March to immediately release Baloch rights defenders, including Mahrang, and to end the repression of their peaceful protests.
UN special rapporteur for human rights defenders Mary Lawlor said she was “disturbed by reports of further mistreatment in prison.”
The judiciary has declined to rule on Mahrang’s detention, effectively halting any appeal and placing the matter solely in the hands of the provincial government.
Insurgents in Balochistan accuse outsiders of plundering the province’s rich natural resources and launched a dramatic train siege in March, during which officials said about 60 people were killed.

Topics: Dr. Mahrang Baloch Mahrang Baloch

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