Cash-strapped Pakistan’s currency has plunged against the dollar after the government indicated it is ready to comply with tough conditions set by the International Monetary Fund (IMF) for the next tranche of its bailout package.
Pakistan is seeking a crucial instalment of 1.1 billion US dollars (£890 million) from the fund – part of its six billion dollar (£4.84 billion) bailout package – to avoid default.
Talks with the IMF on reviving the bailout stalled in recent months.
The rupee closed at 230 to the dollar on Wednesday.
Hours later, Pakistan’s Central Bank confirmed that the currency had plummeted by 9.6% against the US dollar.
Analyst Ahsan Rasool said the rupee’s decline is a sign Pakistan is close to securing the much-needed loan from the IMF.
Financial expert Malik Bostan said the value of the rupee dropped mainly due to the delay in the revival of the IMF’s bailout talks, amid depleting foreign exchange reserves, but he expected it to stabilise as the negotiations pick up again.
The rupee’s slide comes days after Prime Minister Shahbaz Sharif said his government is ready to adhere to the “tough conditions of the IMF” to revive the six billion dollar bailout package, which has been on hold for several months.
Pakistan is currently grappling with one of the country’s worst economic crises amid dwindling foreign exchange reserves.
That has raised fears that Pakistan could default, although Mr Sharif insists it pulled the country from the brink of the default when it took over last year.
Mr Sharif has blamed former prime minister Imran Khan and his government for the economic malaise.
Mr Khan was ousted in a no-confidence vote in parliament in April, and has since been campaigning for early elections.
