Islamabad: Protests in Pakistan continue to gain momentum with each passing day as hundreds of thousands of locals burn their electricity bills, rejecting the imposed high tariffs and taxes.
While the situation is fast getting out of control, the Pakistan government has said that its hands are completely tied to the International Monetary Fund (IMF) and cannot give any relief without the financial agency’s consent.
The constant devaluation of the Pakistani rupee has caused inflation and also compelled the central bank to raise the interest rates, Dawn reported.
The Central bank is raising the interest rates to mitigate the repercussions of uncontrolled depreciation of the local currency.
The State Bank of Pakistan reported that the dollar appreciated by Pakistani Rupee (PKR) 1.40 to reach PKR 304.45 in the inter-bank on Wednesday.
“The market is not in control of anyone. The steep devaluation will continue and even cross the limit given by the International Monetary Fund,” a senior banker said, adding that nobody knows what is next for the exchange rate, reported Dawn.
Under the Standby Arrangement (SBA), the IMF will provide USD 3 billion in three instalments over nine months and is willing to witness a 20 per cent devaluation of PKR against the US dollar in Fiscal Year 24.
However, in less than two months of the current fiscal year, the PKR has devalued by 10.5 per cent or Rs 29 per dollar. On July 4, when the IMF approved the SBA, the dollar in the inter-bank market was traded at Rs275.44, which reached Rs 304.45 on Wednesday.
The sharp rise in inflation is expected to prompt the SBP to address it with a further interest rate hike. The interest rate is already at a record high of 22 per cent, which has already diminished the possibility of domestic investments. A further increase could prove devastating for trade, industry, and overall economic growth, which is projected to be at 2.5 per cent in FY24.
