From frying pan into fire: Violence post-Imran Khan arrest plunges Pakistani rupee to record low

Pakistan seems to be in an overall free fall as given the political crisis precipitated in the wake of PTI chief and ex-PM Imran Khan’s arrest, its economy slipped into a deeper muddle with Pakistani Rupee tanking to a new nadir against the US dollar.

The Pakistani rupee weakened 1.3 per cent, dipping to a historic low of Rs 288.5 against the US dollar in the interbank market, a day after Imran Khan was arrested by National Accountability Bureau (NAB) from Islamabad High Court for his alleged involvement in Al-Qadir Trust case.

The PKR traded at Rs 290 per dollar in the interbank market, a decline of Rs 5.16 from Tuesday’s close of Rs 284.84.

In the open market, the PKR was traded at Rs 295, falling Rs 5 from Tuesday’s close of Rs 290.

Pakistan’s international bonds also nudged lower with the 2024 issue down 0.4 cents on the dollar.

The bonds trade at deeply distressed levels with shorter-dated maturities priced at 49 cents on the dollar and the longer-dated ones changed hands at around 33 cents.

Why led to sharp fall of Pakistani rupee?

A report by Dawn quoted general secretary of the Exchange Companies Association of Pakistan, Zafar Paracha, saying that the unrest in the country after Imran’s arrest as well as comment by Moody’s on Tuesday, warning that the country could default if it fails to get a bailout from the International Monetary Fund (IMF) by June, were behind the sharp decline in the local currency.

Paracha further said there has been increase in demand for dollar by importers. He also said that pressure on the rupee would continue until the political situation stabilises and the IMF deal is finalised.

On Tuesday, Grace Lim, a sovereign analyst with Moody’s in Singapore, said: “We consider that Pakistan will meet its external payments for the remainder of this fiscal year ending in June.”

“However, Pakistan’s financing options beyond June are highly uncertain. Without an IMF programme, Pakistan could default given its very weak reserves.”

Protests have intensified in Pakistan after Imran Khan was taken into custody by paramilitary Rangers, who were acting on the National Accountability Bureau’s (NAB) warrant.

The former Pakistan was in Islamabad High Court to seek bail in multiple cases registered against him.

With inputs from agencies

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