Rupee witnesses biggest fall in over 24 years as Pakistan moves to meet IMF condition for bailout deal

A currency trader counts Pakistani Rupee notes as he prepares an exchange of US dollars in Islamabad, Pakistan on December 11, 2017. (REUTERS)
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Updated 26 January 2023
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Rupee witnesses biggest fall in over 24 years as Pakistan moves to meet IMF condition for bailout deal

  • Pak rupee fell by around 9.61 percent or Rs24.53 in the interbank market on Thursday
  • A market-based exchange rate is one of the conditions the IMF has set before it agrees to unlock a stalled bail-out program for Pakistan

KARACHI: Pakistan’s national currency on Thursday witnessed its biggest fall in a single day in over 24 years, as it depreciated by over 9 percent against the US dollar, as Pakistan moves to meet the International Monetary Fund's (IMF) conditionalities to resume a stalled $7 billion bailout program, dealers and analysts said. 

The rupee closed what transpired to be one of the most volatile trading sessions of the year at Rs255.43 against the greenback. The national currency witnessed massive depreciation of around 9.61 percent, or over Rs24.53 in the interbank market, according to data released by the State Bank of Pakistan.  

Pakistan's rupee previously saw such a massive single-day depreciation back on October 26, 1998, when it depreciated by 9.9 percent against the US dollar, according to Arif Habib Limited research. 

“The much-awaited PKR adjustment has been done today by allowing banks to quote rates based on market demand-supply,” Muhammad Sohail, CEO of Topline Securities, told Arab News. 

Sohail said this was also the case till September 2022 when the bank rate was kept in a narrow band that gave rise to the black market. He expects the move will now pave the way for the revival of the stalled IMF program.  

“Now the black market rate will come closer to the bank rate," he said. "This will help in increasing exports and inward remittances through the banking channel. This may also help in reviving the delayed ninth review with the IMF and inflows from friendly nations," he added.    

During the intra-day trading, Pakistan's rupee plunged as low as Rs259.75 for selling and Rs254.75 against the greenback as  Pakistani authorities apparently allowed the currency to adjust itself according to the market demand and supply requirements.   

The currency also recorded a massive free fall in the open market where it depreciated by Rs19.4 to Rs260 for buying and Rs19 to Rs262 for selling against the greenback, according to the Exchange Companies Association of Pakistan (ECAP). 

The ECAP said late on Tuesday it was lifting the cap on the currency in the interest of the country.

Moving away from the managed exchange rate to free float was meant to discourage the prevailing three different rates to assess the dollar's value: the state bank’s official rate, the one assessed by the foreign exchange companies and the black market rate. 

“Today was a historic day for the open and interbank market as the currency devaluation has made a fresh record,” ECAP Secretary General Zafar Sultan Paracha told Arab News. 

However, he said the move could not discourage the black marketing of the dollar. Paracha said exchange companies were already selling the dollar to banks through credit cards at Rs255, indicating that the currency was likely to depreciate to this level. 

The move toward a market-based exchange rate takes Pakistan one step closer to the revival of a stalled bailout program as it is one of the conditions that the IMF has set before it agrees to unlock more funds. Previously, against IMF advice, Finance Minister Ishaq Dar has tried to defend the rupee, including currency market intervention. 

Pakistan’s national currency has been under immense pressure due to a higher demand for import payments amid a forex crisis, with reserved held by the central bank now falling to $4.6 billion, barely enough to cover three weeks of imports.  

The low reserves have compelled the government to restrict the import of goods, including industrial raw materials, to stop dollar outflows, while commercial banks have stopped issuing letters of credit (LCs), leaving importers struggling to arrange the greenback for already placed orders.  

Analysts said the IMF wanted Pakistan to use a market-determined exchange rate rather than keep it artificially managed.  

“IMF wanted Pakistan to have market-determined rates, electricity and gas tariff hikes, and a minibudget as preconditions to revive the stalled program,” Tahir Abbas, Head of research at Arif Habib Limited, told Arab News. 

“Today’s move seems that the country is meeting IMF conditions. It is now expected that the fund program will be resumed next month.”  

Analysts said the move to further liberalize the currency market would fuel inflation in the country which currently hovers around 24 percent. 

“The currency depreciation is likely to fuel inflation in the country and we expect that rate measured by the consumer price Index would hit 30% in the coming months,” Samiullah Tariq, Director Research at Pakistan Kuwait Investment Company, told Arab News.  

Pakistani analysts expect the currency depreciation would continue and rupee would likely hit Rs270 against the greenback by end of the current fiscal year. 

“We maintain our exchange rate forecast and expect PKR-US$ exchange rate to trade close to Rs270 by June 2023 in the interbank market,” Topline Securities said in its report on Thursday. 


UN to cut 20 percent of humanitarian staff amid funding shortfall, scale back operations in Pakistan

Updated 14 sec ago
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UN to cut 20 percent of humanitarian staff amid funding shortfall, scale back operations in Pakistan

  • UN aid chief Tom Fletcher cites a $58 million shortfall after major funding cuts by the US
  • Fletcher says the agency will focus its resources by operating in fewer locations than before

UNITED NATIONS: The United Nations Office for the Coordination of Humanitarian Affairs (OCHA) will cut 20 percent of its staff as it faces a shortfall of $58 million, UN aid chief Tom Fletcher has told staff after OCHA’s largest donor — the United States — cut funding.
“OCHA currently has a workforce of around 2,600 staff in over 60 countries. The funding shortfall means we are looking to regroup to an organization of around 2,100 staff in fewer locations,” Fletcher wrote in a note to staff on Thursday.
OCHA works to mobilize aid, share information, support aid efforts, and advocate for those in need during a crisis. It relies heavily on voluntary contributions.
“The US alone has been the largest humanitarian donor for decades, and the biggest contributor to OCHA’s program budget,” Fletcher said, noting that its annual contribution of $63 million would have accounted for 20 percent of OCHA’s extrabudgetary resources in 2025.
Since returning to office in January for a second term, US President Donald Trump’s administration has slashed billions of dollars in foreign assistance in a review that aimed to ensure programs align with his “America First” foreign policy.
UN Secretary-General Antonio Guterres last month announced a new initiative to improve efficiency and cut costs as the world body turns 80 this year amid a cash crisis.
Fletcher said OCHA would “focus more of our resources in the countries where we work,” but would work in fewer places.
“OCHA will scale back our presence and operations in Cameroon, Colombia, Eritrea, Iraq, Libya, Nigeria, Pakistan, Gaziantep (in Turkiye) and Zimbabwe,” Fletcher said.
“As we all know, these exercises are driven by funding cuts announced by Member States and not by a reduction of needs,” he said. “Humanitarian needs are on the rise and have perhaps never been higher, driven by conflicts, climate crises, disease, and the lack of respect of international humanitarian law.”


Thousands rally across Pakistan against Israeli airstrikes in Gaza, urge Muslim states to act

Updated 35 min 27 sec ago
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Thousands rally across Pakistan against Israeli airstrikes in Gaza, urge Muslim states to act

  • Jamaat-e-Islami, the country’s key religio-political party, called the protest across Pakistan
  • JI chief urges building a strong pro-Palestine movement and preparing for a nationwide strike

KARACHI: Thousands of supporters of a prominent Pakistani religio-political party poured into the streets of Lahore and other major cities on Friday to protest Israel’s military strikes in Gaza, with their leaders demanding urgent action from Muslim states to stop the bloodshed.

The call for nationwide demonstrations came from Jamaat-e-Islami (JI) after intensified conflict in Gaza, which began in October 2023. International efforts for a ceasefire have not held, with reports indicating the Palestinian death toll has surpassed 50,000, with a significant number of women and children among the casualties.

Pakistan has long advocated for an independent Palestinian state based on pre-1967 borders with Al-Quds Al-Sharif as its capital and does not recognize Israel.

Addressing a large gathering in Lahore, the JI chief, Hafiz Naeem-ur-Rehman, urged Muslim leaders to get united.

“Liberating this occupied land is the duty of every Muslim,” he said. “When our paths are blocked [as individuals], it becomes the responsibility of [Muslim] rulers and their armies. Even a small step forward can lead to a ceasefire.”

In his speech, Rehman emphasized the historical and ideological connections between Pakistan and Palestine, remembering how his country's founder, Muhammad Ali Jinnah, made them clear.

“When Israel was imposed as an illegitimate entity [over Palestinian territory and people] in 1948, Quaid-e-Azam [Jinnah] said that Israel was the illegitimate child of the West, a tool created for their use,” he continued.

The JI chief also highlighted the engagement of Dr. Muhammad Iqbal, Pakistan’s national poet-philosopher, with the Palestinian issue, mentioning his attendance at a conference in Palestine in 1931.

“That is the foundation of Pakistan’s connection with Palestine, and it was a stated policy of our country that we promised never to recognize Israel,” he added. “So, if anyone talks about a two-state solution, or speaks in favor of Israel in secrecy, we want to make it clear that there is only one state — the state of Palestine — and it is under occupation.”

Rehman called for sustained public pressure on governments around the world, hoping it would force them to address the issue.

“Pressurize your government through public protest,” he said. “Protests have erupted in Bangladesh, in India and across Europe and America — people are rising. Don’t let this flame of resistance die. Be ready for the struggle.”

He maintained he would consult religious scholars and speak with other parties to unite for a powerful movement.

“We are already in communication with the Palestinian leadership. One day, we will call for a complete nationwide strike across Pakistan,” he said, appealing to traders and the general public to prepare for future mobilization and boycott of Israeli and Western products.

“We do not stand with the oppressors,” he continued. “The Palestinian resistance is legitimate under the UN Charter.”

Meanwhile, in Karachi, hundreds gathered outside the Bait-ul-Mukarram Mosque in the Gulshan-e-Iqbal neighborhood, where the city’s JI chief, Munem Zafar, addressed the protesters.

“The massacre in Gaza continues unabated. Zionist forces are committing genocide. Over 60,000 people have been martyred in the last 18 months,” he said, adding that 90 percent of Gaza’s infrastructure had been destroyed by Israeli airstrikes.

Zafar announced a “Solidarity with Gaza March” to be held in Karachi on April 13 along Sharah-e-Faisal, to be led by Rehman, the party’s central chief.

“We want to awaken the conscience of the Muslim rulers,” he said. “We urge families — children, elders, women — to join in large numbers.”

The party also called for a boycott of goods produced by companies supporting Israel.

Hundreds of protests were also held outside various mosques after the Friday prayer congregations in Karachi and other Pakistani cities on JI’s call.


Pakistan, China agree to boost air force ties with joint drills, tactical training

Updated 11 April 2025
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Pakistan, China agree to boost air force ties with joint drills, tactical training

  • The two countries reaffirm commitment to revitalizing military ties during Pakistan air chief’s Beijing visit
  • The air chief invites Chinese firms to collaborate on drones, electronic warfare and space programs

ISLAMABAD: Pakistan and China have agreed to enhance cooperation between their air forces, focusing on joint exercises and advanced tactical training, during a visit by the Pakistani air chief to Beijing, according to an official statement released on Friday.
The two countries maintain close defense, diplomatic and economic relations. Their strategic partnership is exemplified by their collaboration on the JF-17 Thunder fighter jets, co-developed by Pakistan Aeronautical Complex and China’s Chengdu Aircraft Corporation. The aircraft has been inducted into Pakistan’s fleet and exported to countries including Myanmar, Nigeria, and Azerbaijan.
The Pakistan military’s media wing, Inter-Services Public Relations (ISPR), said in a statement that Air Chief Marshal Zaheer Ahmed Baber Sidhu held a meeting with China’s Defense Minister Admiral Dong Jun wherein both officials reaffirmed the joint commitment of the two countries to revitalize the existing bilateral military ties strategic cooperation.
“Both sides agreed on enhancing Air Force-to-Air Force cooperation, particularly through complex and aggressive tactical-level scenarios during aerial exercises,” the ISPR said. “The cooperation is aimed at addressing challenges in multiple domains during joint exercises, equipping air and ground crew of both Air Forces with the skills necessary to counter modern Air and Space Warfare challenges effectively.”
During his visit, the Pakistani air chief also met with China’s Air Force Commander General Chang Dingqiu and Major General Cao Xiaojian, Director General of the Bureau of Military Equipment and Technical Cooperation.
Sidhu’s conversation with the Chinese officials focused on technology transfer and collaborative development of advanced military hardware.
He also invited Chinese defense companies to participate in its National Aerospace Science & Technology Park, offering incentives for developing projects in unmanned aerial systems, electronic warfare and space programs.
The air chief’s visit underscored the strategic partnership between Pakistan and China, which extends beyond defense to include economic initiatives like the China-Pakistan Economic Corridor.


Etihad Airways announces new Peshawar route, expanding Pakistan network

Updated 11 April 2025
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Etihad Airways announces new Peshawar route, expanding Pakistan network

  • Five weekly flights to Peshawar will launch in September, increasing to daily service from November
  • Peshawar will become Etihad’s fourth gateway to Pakistan and its sixteenth new destination in 2025

ISLAMABAD: Etihad Airways said this week it would launch a new route to Pakistan’s northwestern Peshawar city in September as part of a broader expansion of its global network.
The route will link Abu Dhabi’s Zayed International Airport with Bacha Khan International Airport in Peshawar starting September 29.
Etihad, the national carrier of the United Arab Emirates, already operates flights to Karachi, Lahore and Islamabad, making Peshawar its fourth nonstop destination in Pakistan.
“We are thrilled to further expand our presence in Pakistan with the launch of our daily service between Abu Dhabi and Peshawar,” Antonoaldo Neves, the airline’s chief executive officer, said.
“This new route reflects our commitment to providing vital connectivity for travelers between Pakistan and the Gulf, Africa, Europe and North America,” he added.
Etihad will initially operate the route five times a week using Airbus A320 family aircraft, with daily service beginning November 22. The aircraft will feature eight Business Class and 150 Economy Class seats.
The announcement comes amid a busy year for the airline, which has added 16 new destinations in 2025, including Prague, Warsaw, Algiers, Tunis, Atlanta and Addis Ababa.
Etihad is also boosting frequency to Karachi to 17 flights a week starting October 1 and expanding service to major European cities such as Paris, Milan and Frankfurt.
Passengers traveling through Abu Dhabi will also have access to the airline’s Stopover program, offering up to two complimentary nights at premium hotels in the UAE capital.


Pakistan eyes fan exports to Gulf, Africa in push to boost economy

Updated 11 April 2025
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Pakistan eyes fan exports to Gulf, Africa in push to boost economy

  • Muhammad Aurangzeb calls for enhanced productivity to compete in global markets
  • Pakistan’s exports rose 8 percent to $24.7 billion in the current fiscal year through March

KARACHI: Pakistan’s Finance Minister Muhammad Aurangzeb on Friday hinted at the export of locally produced electric fans with new and improved technology to Gulf and African countries, saying it could potentially boost the country’s export economy.
Pakistan’s fan industry is primarily concentrated in the Punjab cities of Gujranwala and Gujrat, both of which play a key role in domestic production through numerous small and medium enterprises. The country’s leading brands in the sector are all based in these two urban centers, supplying products nationwide.
The finance minister’s statement comes as Pakistan looks to diversify its export base and reduce reliance on traditional sectors like textiles. With energy-efficient appliances such as fans in growing demand globally, particularly in warmer regions like the Gulf and Africa, the government is exploring ways to modernize local manufacturing and align with international standards to reinvigorate industrial output and foreign exchange earnings.
“We are looking forward for these products to not only be used in Pakistan but also have a very good market share in the exports market going forward,” Aurangzeb said while speaking on the sidelines of the “Made in Gujranwala Exhibition” at a local hotel in Islamabad.
“Our efforts now should be to take it to the exports level if we have this much productivity and it is internationally competitiveness as well,” he continued, adding it was important to figure out “how we have to take this initiative ahead to move old fans and the new technology forward.”
According to the Pakistan Bureau of Statistics, Pakistan’s exports rose by 11 percent to $30.7 billion in the last fiscal year ending June 2024. As of March this year, the country has exported $24.7 billion worth of goods, marking an eight percent increase compared to the same period a year earlier.
Aurangzeb said African and Gulf markets were ideal for the export of Pakistani products.
“We have to move toward an export-led growth,” he noted, assuring businesses of the full support of the finance ministry. “Every single sector in this country has to export.”
The government is working to revive Pakistan’s economy with the help of the International Monetary Fund (IMF). The IMF’s executive board is expected to approve a $1 billion tranche for Pakistan under its new loan program in the coming weeks.