Pakistan Political Crisis: Pakistani rupees fall to historic low amid political crisis

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• Apr 11, 2022 | Dhupali Das

Reserves have fallen from $16 billion to $12 billion since March, as the deficit has reached 70% for the first nine months of the fiscal year 2021-22.

Digital Desk: The Pakistan rupee fell to a historic low of 191 rupees to the dollar on Thursday as an ongoing political crisis shook the country's currency.

The rupee has been falling for months, but the drop became severe in March when opposition leaders tabled a no-confidence motion against Prime Minister Imran Khan, leading to the national assembly's dissolution last week.

The rupee has lost more than 6 percent in a month and traded at 191 on the open market on Thursday and 189 at the interbank rate.

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"The political mess has resulted from uncertainty, which has harmed the rupee," said Mohammad Sohail, CEO of Topline Securities, a brokerage and economic research firm based in Karachi.

The Supreme Court of Pakistan was convening on Thursday to rule on the legality of Imran Khan's political maneuverings that led to the dissolution of the national assembly.

Pakistan's foreign exchange reserves, which rely on capital inflows from expatriates, have been insufficient to stem the country's growing trade deficit.

Reserves have fallen from $16 billion to $12 billion since March, as the deficit has reached 70% for the first nine months of the fiscal year 2021-22.

The rupee has lost 18 percent of its value against the dollar since July 2021.

Relationships with the United States and the International Monetary Fund (IMF) are also important as IMF has approved a $6 billion bailout package for Pakistan to help it with its balance-of-payments problems in 2019. Notably, half of the funds have been distributed, but the remainder is being renegotiated.