Pakistan Finance Minister Miftah Ismail said Pakistan’s “economic fundamentals” remain intact and the ongoing rupee devaluation against the US dollar is due to speculation and political turmoil.
“Looking at the economic fundamentals, I don’t think that there is any such situation which could lead to the recent rupee devaluation in the market,” said Miftah, while talking to a private channel on Tuesday night.
“The rupee devaluation is not due to dollar supply or demand but due to satte baazi (speculation) and political uncertainty,” said Miftah.
On Tuesday, Pakistan's rupee closed at a record low of 221.99 against the US dollar, going as low as 224 during intra-day trading amid renewed political uncertainty that wrecked market confidence and also gave "speculators" additional fodder.
This was the highest day-on-day depreciation after June 26, 2019, said a post-market note from brokerage house Arif Habib Limited (AHL).
Moreover, the State Bank of Pakistan (SBP) on Tuesday said that the recent rupee depreciation against the US dollar was "in large part a global phenomenon," adding that in real effective terms, the "depreciation in the rupee value since December 2021 has only been 3%."
Meanwhile, the finance minister said that the government is no longer in danger of default.
“I believe that we have averted the risk of default,” he said, adding that the recent political developments in the wake of Pakistan Tehreek-e-Insaf's victory on a majority of seats in the recent Punjab by-elections has created turbulence in the market.
Sharing key economic indicators, the economic chief said that an import of $7.7 billion was recorded in June, which translates into an import bill of $80 billion for FY22.
“This led to a current account deficit of $17 billion, which pushed our reserves downwards. However, the government has imposed a number of measures to arrest this trend."
FY21-22: Textile group exports witness 25.53pc growth
He said that in the ongoing month of July, Pakistan has registered imports of $2.6 billion only, which comprises of $700 million of oil imports and $1.9 billion of other imports.
The minister said that the government has “substantially curtailed” the import bill, and expected it to drop below $6 billion in the ongoing month.
In a press conference later on Wednesday, Miftah repeated that the rupee’s sharp fall was solely due to the political crisis in the country, as the country’s economic fundamentals remained stable.
“Dollar is rising against all currencies. In fact, dollar is at 22-year high against a basket of strong global currencies,” said Miftah.