Pakistani rupee recovers after falling below 202 against USD

KARACHI: On Wednesday, the Pakistani rupee fell for the 14th consecutive working day, crossing Rs202 against the US dollar in the interbank market for the first time.

The currency fell further as the country’s default risk, as measured by the credit default swap (CDS), remained abnormally high despite a mounting foreign currency shortage.

As the expelled Pakistan Tehreek-e-Insaf (PTI) began its long march to the federal capital, the Pakistani rupee fell to an intraday low of Rs202.49, despite the coalition government’s assault on party workers and leaders in an attempt to prevent them from moving on to Islamabad. Later, the rupee regained some of its losses and closed at Rs201.92, down 0.25 percent from Tuesday’s close of Rs201.41.

“The country’s risk of default has spiked to 15%,” Samiullah Tariq, Head of Research at Pak Kuwait Investment Company, said. “It usually hovers around 3-4% at a time of stability in the economy.” The CDS increased in response to abnormally high yields on Pakistan’s Eurobonds on the international market.

The yields jumped to 26-27 percent, showing that foreign investors are becoming increasingly concerned about Pakistan’s sovereign bonds. “The rupee will maintain its downturn until the International Monetary Fund (IMF) resumes its $6 billion loan programme,” he warned.

According to conflicting sources, the IMF will continue to work with Pakistan to revive the multibillion-dollar initiative, implying that the Pakistan-IMF talks in Doha (May 18-25) ended inconclusively for the time being and that the program’s rebirth has been postponed.