Pakistani Rupee has hit an all time low of 149.5 against USD in interbank market. The currency has lost over 30% of its value as compared to USD in last one year. The rupee has been under pressure due to a shortage of the US currency. Alleged capital flight from the country has been given as another reason.
The present round of PKR’s nosedive has been attributed to a deal with IMF, where Islamabad agreed in principle to a $6 billion loan in exchange for
IMF’s condition for a “market-based exchange rate mechanism, which will see limited intervention by the central bank now”.
While the economists in IMF may have chosen to find a natural value for PKR, the nations’s current account deficit is making it a fall into a bottom less pit.
OBOR/BRI related imports from China have completely robbed the economy of any natural momentum to sustain on its own, forcing Imran Khan to ask for IMF for loan. However IMF conditions for transparency it OBOR and BRI projects and for better management of public funds have resulted in market discovery of real value of PKR. By some estimates, the beleaguered currency may loose sheen by another 30%.
For all practical purposes, the Pakistan State Bank, has not stepped in to support the Jinnah faced notes and dollar hoarders are further driving the value down in hope of discovering a better PKR value against USD
However at there low levels, a support is expected from Non-resident communities, who are expected to provide higher remittances in hope of finding better value for their hard earned dollar.
Remittances from overseas Pakistani reached $17.87 billion in first 10 months (July to April) of the 2018-19 fiscal year, a growth of 8.45 per cent compared with $16.48 billion received during the same period in the preceding year
