The Pakistani currency dropped to a record low, as billions of dollars in aid promised by countries in the Middle East to support the financial situation has not arrived yet.
The rupee is 0.4% off the 240.375 per dollar rate, the lowest it reached earlier this year. The currency was among the worst performing currencies globally in September, falling more than 8%.
A weak currency may exacerbate price pressures in Pakistan after inflation surged to its highest level in nearly five decades. The country is also struggling in the wake of a series of deadly floods and needs additional funds beyond the International Monetary Fund’s $1.1 billion loan to avoid default.
“The IMF loan was related to sentiment and it was expected that it would be followed by inflows from other friendly countries; as these things were destined to materialize, but we did not witness no streams yet.
Saudi Arabia, the United Arab Emirates, and Qatar have pledged a total of $9 billion in investments and loans to the country in the past two months.
Pakistan also expects to receive $4 billion in funds from the Asian Development Bank, the Asian Infrastructure Investment Bank, and the World Bank to help boost its foreign exchange reserves and ease pressure on its currency.
Apart from external financing to boost reserves, Pakistan has also sought to clamp down on currency speculation. Where the Minister of Finance, Miftah Ismail, said that he is investigating eight banks in speculative operations in foreign currencies and selling dollars at a price higher than the market price by about 5% to 10%.