USD/PKR has recovered the recent losses. The pair started the day at the lowest level since the summer of last year, dropping below 154.00.
Nevertheless, it quickly recovered and is now trading at 154.265 as of 9:10 AM UTC. While the pair is gradually declining since the end of June 2019, it behaves quite predictably and shows hardly any volatility when compared to floating currencies. This happens because the Pakistani government controls the rate of its rupee traded against the US dollar.
IMF mission in Islamabad concluded that the country has progressed
However, that might change soon as the International Monetary Fund (IMF) called last year the Pakistani government to give up its control of the currency rate in exchange for the bailout that the fund is offering. The IMF concluded a ten-day mission in Islamabad last Friday, finding that the country had made visible progress in the last few months.
Ernesto Ramirez Rigo, who led the IMF mission, commented:
“The IMF staff team had constructive and productive discussions with the Pakistani authorities and commended them on the considerable progress made during the last few months in advancing reforms and continuing with sound economic policies.”
According to the international fund, the Pakistani economy has stabilized and is experiencing a gradual recovery.
Last summer, the IMF green-lighted a $6 billion bailout to support the Pakistani economy. Thus, the country is receiving $2 billion per year. For this, the Pakistani rupee has to be dealt with by the open market rather than controlled by the government.
Pakistan is dealing with increasing prices and growing inflation that has had repercussions on consumers. Nevertheless, the IMF concluded that the foreign reserves of the country are rebuilding at a faster pace than initially expected. Rigo noted:
“Inflation should start to see a declining trend as the pass-through of exchange rate depreciation has been absorbed and supply-side constraints appear to be temporary.”
The State Bank of Pakistan stated earlier that the country’s external debt currently stands at about $100 billion. A significant part of it was borrowed from the IMF, and also from the World Bank, Asian Development Bank, Islamic Development Bank, the US, China, France, and other countries.
