Pakistan rupee slides against dollar amid political crisis

August 26, 2014 - 12:00:00 am

KARACHI: The Pakistani rupee has lost more than four percent against the dollar in a little over two weeks as an ongoing political crisis weighs on the economy, analysts said yesterday.

The slide began when cricketer-turned-politician Imran Khan vowed to march on the capital to stage sit-ins aimed at toppling the government, which he accuses of rigging last year’s election.

The currency fell from 98.85 to the dollar on August 8 to 103 rupees to the dollar in the official interbank market yesterday — a slide of 4.2 percent.

Followers of Khan and another opposition leader, populist cleric Tahir-ul-Qadri, have been massed outside parliament since August 15 in a bid to force Prime Minister Nawaz Sharif to resign.

Pakistan was granted a $6.8bn IMF bailout package last year to help the country achieve economic reforms, particularly in its troubled energy sector, but analysts warned gains the country has made are at risk.

“The fears loom large that the current political crisis would lead to distracting from economic reforms under the IMF deal,” said Taha Khan, head of research at Taurus Securities.

“If any change occurs in the government, it would raise concerns among IMF officials as to how the fund facility would go on.”

Imran Khan has vowed to default on the country’s international loans if he comes to power and has also called on citizens to stop paying taxes as part of a campaign of civil disobedience.

Pakistan’s foreign exchange reserves stood at $7.8bn before the IMF package was approved but later nearly doubled to $14.8bn — though they have since slid to $13.9bn according to the latest figures. Ministers have said the political impasse is costing the economy millions of dollars a day due its impact on trade, the stock market and foreign investment.