Pakistani rupee suddenly dived by Rs2.04 to Rs207.07 against the US dollar in the inter-bank market at around midday on Tuesday.
The surprise drop came this morning after concern grew out of the Punjab Chief Minister Hamza Shehbaz’s announcement that free electricity would be provided for users of up to 100 units a month ahead of CM elections on July 22 – a move that would go against the conditions of the International Monetary Fund (IMF) loan programme.
Rumours began surfacing that the announcement would cause a fresh delay in the $6 billion loan programme ultimately affecting the trend of recovery that had been maintained for over one week.
The news comes despite the fact that Finance Minister Miftah Ismail had yesterday rubbished reports about the suspension of the IMF programme and said the Extended Fund Facility (EFF) programme with the global money lender was on track.
According to the central bank data, on Monday, the currency had closed at a three-week high of Rs204.56 against the greenback. The trend was expected to only strengthen over the coming few days with predictions of the rupee to recover below Rs200 against the US dollar ahead of the release of $2 billion as part of the next IMF loan tranche by end of July.
The rupee had hit an all-time low at Rs211.93 against the greenback in mid-June, with foreign exchange reserves falling to critically low levels of a mere five-week import cover at $8.2 billion and speculations of delays in the resumption of the IMF loan programme.
Reserves had, however, recovered to above $10 billion last week after China had lent $2.3 billion to Pakistan.