Govt ends subsidy on petroleum products which results in gaining the strength of the Pakistani Currency against the Dollar.
On Friday, May 27, 2022, the rupee got the power of Rs2.50 in interbank trade in the early morning hours after the govt decided to lift the fuel price to cope with the current economic situation and stable Pakistan currency.
The action was taken to comply with the conditions of the International Monetary Fund (IMF).
According to the Forex Association of Pakistan, the Dollar was traded at Rs199.50 after depreciating against the Dollar close of Rs202 and causing the fall of the Pakistani Currency.
The reason for the persistent decline in the rupee’s value is largely attributed to the country’s rising import bills, widening of the current account deficit, and depleting foreign exchange reserves.
After the PML-N had taken over the control of Govt, the Pakistan currency was valued at Rs182.30. However, now it has risen Rs19 on 27, MAY, 2022.
FAP Chairman Malik Bostan explains that the rupee gains control because the Govt has decided to end fuel subsidies.
“We hope this will pave the way for a loan from the IMF, and an agreement will soon be reached which will further ease the pressure on the rupee.” It will further pave the way to boost the foreign exchange reserves.
In a quick action plan, on Wednesday night, the govt raised the prices of all petroleum products by Rs30 per liter, the highest ever increase in the history of all petroleum products in one go.
And remember, this is the first step in convincing the IMF to release the next tranche of $1 bn at the earliest.
Announcing the prices hike, the finance minister of the PML-N current govt has expressed his hope that now the currency rate of Pakistan and its exchange rate will improve, the market will stabilize, and investors could take the decision positively.
Previously Pakistani Govt has decided to ban on importing of luxury items to control the Pk currency against the USD.
The currency rate of the Dollar has been through the fluctuation high and low since the inception of Pakistan in 1947.
Learn about Pakistan’s currency value in 1947; read the blog.