As Pakistan is suffering from economic crisis, the central bank of Pakistan finally intervenes to stop its currency from further devaluation.
This week, Pakistani rupee becomes Asia’s worst performing currency as it dropped by 4%. The nation’s currency fell to a record low 168 to a dollar in intraday trading before closing at 165.
Considering the decline, the State Bank of Pakistan intervenes to only avoid unnecessary panic by addressing disorderly market conditions. The bank, additionally, commits itself to a market-based exchange rate.
“Pakistan took a risky bet on hot money and is now paying the price with the sharp outflow and drop in its currency,” CEO of Alpha Alpha Beta Core Solutions Pvt Khurram Schezad told Bloomberg. “The nation will escape a currency crisis with global commodity prices falling and the nation suspending fuel imports. The rupee will stabilize around these levels now.”
To address its current economic crisis, Pakistan made another request for additional funds to International Monetary Fund (IMF). The organization is working on it.
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IMF to Possibly Help Pakistan Fight against Economic Crisis
IMF has announced that it would consider Pakistan’s financial aid request under IMF’s Rapid Financing Instrument (RFI). The request is to increase foreign exchange reserves and financially support fighting the impact of coronavirus pandemic.
Considering its poor track record, IMF almost bans Pakistan from borrowing more funds for the country. However, IMF says that it is considering the possibility of financial aid for the country under its existing Extended Fund Facility (EFF) program.
“Our team is working expeditiously to respond to this request so that a proposal can be considered by the IMF’s executive board as soon as possible,” said IMF Managing Director Kristalina Georgieva.
To combat the current economic crisis and COVID-19 impact, Pakistani government said that it had arranged US$4 billion from multilateral lending and aid agencies. Of the US$4 billion, the US$1.4 billion is from IMF.
