Pakistani rupee plunges to historic low

Karachi: The Pakistani rupee resumed its downwards slide on Thursday after two modest sessions as the “optimism surrounding the government and IMF talks scaled back”, local media reported.

The Pakistani rupee depreciated by Rs 2.52 to settle at Rs 271.35 at the close of the day. However, the local currency touched 272.17 against the dollar during intra-day trade, Geo News reported.

The rupee had closed at Rs 268.83 on Wednesday.

Since the start of this year, the rupee has depreciated by 44.92, Geo News reported.

Capital market expert Saad Ali said that reports regarding the rejection of the circular debt management plan (CDMP) presented by the government to the International Monetary Fund (IMF) had dented the market’s confidence.

Ali said that these reports created doubts about the possibility of a bottleneck in the ongoing government-IMF talks, Geo News reported.

An IMF mission is currently in Pakistan holding talks on the ninth review that will continue till February 9 after which a staff-level agreement is expected between the two sides.

The IMF has rejected the CDMP presented by the government and asked the authorities to raise the electricity tariff by Rs 12.50 per unit in order to restrict the additional subsidy at Rs 335 billion for the current fiscal year.

During the second day of technical-level talks, the Washington-based lender termed the revised CDMP as “unrealistic”, which is based on certain wrong assumptions. So the government will have to bring more changes in its policy prescription to restrict the losses of the cash-bleeding power sector.

The IMF and the Finance Ministry will work out a gap on the fiscal front after which different additional taxation measures will be finalised through the upcoming mini-budget.

The revised CDMP envisages an increase in the monster of circular debt to the tune of Rs 952 billion for the current fiscal year against an earlier projection of Rs 1,526 billion, Geo News reported.