The depreciation of the Pakistan Rupee against the US dollar continued on Monday as the rupee sunk to a historic low of Rs194 against the greenback in the inter-bank market.
The rupee had closed at Rs192.53 on Friday, according to the central bank. However, today it shed Rs1.70 against the dollar to touch Rs194.23.
According to experts, the balance of payment crisis which might worsen further amid a potential hike in energy prices is mounting pressure on the rupee. This potential hike would affect Pakistan significantly as it relies heavily on imported energy. The energy import bill is already up by 72% in the first 10-month of the current fiscal year 2022.
Similarly, the country’s foreign exchange reserves have depleted to a 22-month low at $10.3 billion. Therefore, the country’s import cover has been reduced to just 45 days at present compared to the usual 90 days import cover.
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In addition to that, Pakistan is also estimated to pay an additional $4.4 billion on foreign debt repayment over the next two months.
In order to avoid a default, the government needed to convince the IMF to restore the ballot package it had signed with the PTI government in 2019. However, the prior condition by the IMF to remove the oil subsidies has not been met by the PML-N government as it postponed the decision once again on Sunday. Islamabad is scheduled to hold a new round of talks with the IMF on Wednesday in Doha.