Islamabad: Pakistan is fast moving towards a total financial meltdown as the rupee hit another record law against the US dollar while the stock market shed at least 1,500 points in two days after Fitch Ratings downgraded the countrys credit rating from ‘stable’ to ‘negative’.
The growing political temperature has also created a non-time bound political uncertainty in the country.
Fitch Ratings downgrading Pakistan’s economic growth came with reference to Pakistan’s agreement with the International Monetary Fund (IMF) to impose tough measures to increase tax base in the country, aimed at the revival of the Extended Funding Facility (EFF) programme.
Fitch has maintained that while it assumes that Pakistan has reached a staff-level agreement with the IMF, implementation of the programme will be very difficult amid the persisting and prevailing political situation in the country, uncertainty over the political stability of the ruling government and its capability to implement tough measures, which the government has agreed with the IMF.
The Fitch downgrade and the prevailing political uncertainty have hit the Pakistani rupee hard, as it slumped to Rs 224 against the US dollar, while the Pakistan Stock Exchange shed at least 1,500 points in two days of trading.
“The recent movement in rupee is the feature of a market-determined exchange rate system. Under this system, the current account position, relevant news items, and domestic uncertainty together determine daily currency fluctuations,” maintained the State Bank of Pakistan.
“The recent rupee depreciation against the US dollar is also in large part a global phenomenon. Globally, the US dollar has surged by 12 per cent in the last six months to a 20-year high, as the US Fed has aggressively raised interest rates in response to rising inflation,” it added.
On the other hand, brokerage houses maintained that bears took charge at the Pakistan Stock Exchange (PSX) as the bloodbath continued.
“Selling momentum continued across the board due to political unrest and rupee devaluation against the US dollar,” said brokerage house Asif Habib.
With no sight of any settlement on the political ground between the ruling government of Prime Minister Shehbaz Sharif and his arch political rival Imran Khan, troubles for Pakistan are far from over.
(IANS)
