Pakistan’s currency saw its largest single-day drop by PKR 24.54 or 9.61% on Jan 25 as per data from State Bank of Pakistan.
The currency of the struggling economy dropped to a record low of PKR 255.43 against the dollar in the interbank market as the Pakistani government loosened its grip on the ‘exchange rate’, letting the currency drop to its value in the open market.
The government has been reported to do so to comply with the conditions of the International Monetary Fund to secure the $6.5 billion in funding.
The steep decrease in foreign exchange reserves has shot-up inflation in the country. The country is on the brink of total collapse as people are unable to bear food inflation. In certain parts of the country, flour packets are being sold for as high as PKR 3,000 as reported by NDTV.
The central bank of Pakistan raised interest rates to a 24-year high to tame inflation.
The positive impact of the government lifting its control on the exchange rate sent the Pakistan stock exchange by 2.4% as reported by Indian Express.
Petrol and diesel prices have been increased by Pakistani Rupee (PKR) 35 and prices of kerosene oil and light diesel oil have been increased by PKR 18.
Pakistan’s Finance Minister Ishaq Dar announced a hike in fuel prices 10 minutes before it came into effect.
(Image Reuters Website)
The finance minister said the prices were increased on the directions of Prime Minister Shehbaz Sharif despite international prices and PKR devaluation as reported by Dawn.
The minister explained that they received reports of “artificial shortages in the market” based on speculation that the price will be increased by PKR 50, as reported by Dawn.
Combating the already “sky-high” inflation will be a challenge for the crisis-laden nation as fuel prices are increased.
The country has been suffering from political instability with coups and pre-term elections. The floods of 2022 have dealt a devastating blow to the struggling country.
The Pakistani government’s decision to lift the control on the exchange rate of the PKR is a step that will help raise funds for the destitute economy.
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