Karachi March 1 2023: Pakistan Rupee depreciates both in Interbank and Open market against dollar as country failed to reach agreement with IMF even after passing 20 days of staff level visit.
Moreover, Moody’s Investors Service (“Moody’s”) on Tuesday downgraded the Government of Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to Caa3 from Caa1. Moody’s has also downgraded the rating for the senior unsecured MTN programme to (P) Caa3 from (P) Caa1.
Pakistan Rupee depreciates PKR 4.5 or 1.7 percent in Interbank to trade at PKR 266.0 at PST 12:35 on Wednesday. During the week Rupee lost PKR 6.01 or 2.3 percent against the dollar in Interbank.
In open market dollar is trading at PKR 269.6 at PST 12:00 against yesterday closing of PKR 266.5.
The decision to downgrade the ratings is driven by Moody’s assessment that Pakistan’s increasingly fragile liquidity and external position significantly raises default risks to a level consistent with a Caa3 rating.
In particular, the country’s foreign exchange reserves have fallen to extremely low levels, far lower than necessary to cover its imports needs and external debt obligations over the immediate and medium term. Although the government is implementing some tax measures to meet the conditions of the IMF programme and a disbursement by the IMF may help to cover the country’s immediate needs, weak governance and heightened social risks impede Pakistan’s ability to continually implement the range of policies that would secure large amounts of financing and decisively mitigate risks to the balance of payments.
The forthcoming meeting of the Monetary Policy Committee has also been preponed and now it will be held on Thursday, March 02, 2023 to reduce the uncertainty in the market about rate hike, according to State Bank of Pakistan.
An International Monetary Fund (IMF) mission led by Mr. Nathan Porter visited Islamabad during January 31 – February 9 to hold discussions under the ninth review of the authorities’ program supported by the IMF Extended Fund Facility (EFF) arrangement.
