The local currency continued its decline on Thursday as it fell to Rs207.7 against the US dollar in intra-day trading in the inter-bank market.
Speaking to Business Recorder, Arif Habib Limited Head of Research Tahir Abbas sai that the local currency extended its fall on account of post-budget uncertainty.
Finance Minister Miftah Ismail had earlier said that the government’s budget 2022-23, announced last week, failed to convince the International Monetary Fund (IMF) to disburse the next tranche of $6 billion loan programme to Pakistan, and amendments would be needed in the finance bill.
“The finance minister has clearly stated that IMF is not happy with the budget and there will be changes to it,” said Abbas.
“Once the amendments are incorporated in the Finance Act, only then rupee will stabilise.” He expected the local currency to remain volatile over the next few days.
Late on Wednesday, the government of Pakistan announced a third hike in the prices of petroleum products in less than three weeks, as it looks to quickly appease the IMF, which has emphasised the termination of energy subsidies to revive its bailout programme.
Pakistan is set to receive $900 million in the next installment of the IMF scheme but the global lender has paused the programme owing to a host of factors including fuel subsidies and a widening current account deficit. It has also said there is a need to raise more direct taxes.
On Wednesday, the rupee closed at an all-time low of Rs206.46 against the greenback.
While this was because the dollar added strength internationally, it was also down to the local currency market anticipating a further spike in inflation.