By the time, the working day ended on Thursday, the rupee had reached a historic low of Rs 255.43 per dollar in the interbank market, down Rs 24.54 or 9.61 percent from Wednesday, making it the largest single-day loss in both absolute and percentage terms in the modern exchange rate regime since 1999. The worst fall is attributed to the Exchange Companies Association of Pakistan’s lifting of the friendly cap on the open market dollar-rupee rate, which stems from State Bank of Pakistan’s efforts to re-secure a market-based exchange rate, as required by the International Monetary Fund for the restart of its delayed loan programme and the abolition of the black market. The dollar crossed Rs 250 in a single day, indicating that the economy is at risk of collapse. Businesses are finding it impossible to operate due to power outages and a severe lack of foreign currency as officials attempt to resurrect an IMF bailout to alleviate the escalating disaster. The dollar’s free decline indicates that the government has buckled and that the dollar rate is no longer under the control of Ishaq Dar, the economist famed for regulating the dollar rate.
The reserves have decreased even worse since clearing a Chinese loan on January 24. The IMF is the first lifeline. Pakistan must get off the ventilator and push itself out of its current economic predicament. But it isn’t all. To shore up our reserves, we must take extreme actions. Relying on loans and friendly countries can be a short-term solution; they can provide a temporary reprieve, but only for so long. These debts must be repaid, or we will be back at square one. Our first objective should be to build our economy. Meanwhile, citizens may have difficult times ahead, but they will not be as bad as they could be if the country declares bankruptcy.
A weak rupee, on the other hand, is welcomed by exporters; it gives them a considerable share of the worldwide market, notably in textiles, where Bangladesh has gained ground in the last six months. The scarcity of cash is equally severe. In addition, the lifting of the unofficial cap on the dollar rate has increased market confidence, the stock market is on a bullish trend, experts are optimistic, and the revival of the IMF loan programme appears to be foresight. All of these circumstances would allow the IMF to disburse the desperately required $1.2 billion if its requirements were met. Analysts predict that the dollar rate will stabilise once the exchanges receive the buck. The government will be required to meet some other IMF requirements. A rise in gasoline prices is also on the cards. There have also been claims that a pay decrease for government employees is another condition, but this has yet to be substantiated.
There are a few options in the current configuration. Even Pakistan’s friendly countries have connected monetary assistance to the IMF programme. With the introduction of the IMF programme, it is hoped that shipping containers piling up at ports will be relieved, and industrialists’ challenges, exacerbated by load-shedding and a dollar shortage, will become a thing of the past.
