Pakistani rupee plunges as government seeks IMF bailout

The Pakistan rupee tumbled about seven percent on Tuesday after a central bank devaluation, as the government said it would approach the International Monetary Fund (IMF) for a bailout package.

As Pakistan devalued its currency for the fifth time since December, the Pakistan rupee fell to as low as PKR 134 against the US dollar, after closing at 124.26 on Monday, according to news reports.

The drop on Tuesday came after Pakistani finance minister Asad Umar announced Monday night that the cash-strapped country would approach the IMF for a bailout for the 13th time in its history.

“Local news reports from Pakistan suggest that currency was intentionally weakened to fall in line with the strict conditions laid down by IMF,” said Vijay Valecha, chief market analyst at Century Financial Brokers.

“The current crisis in Pakistan has been triggered by a balance of payment crisis and inadequate foreign exchange reserves to pay for imports. With global economy slowing down and countries across the world erecting trade barriers, it is highly unlikely that exports from Pakistan will have a sharp turnaround,” he added.

However, the IMF on Tuesday denied that the fund has been formally approached by Pakistan for financial assistance.