International credit rating agency Moody’s on Tuesday changed Pakistan’s credit rating to B3 negative despite acknowledging Pakistan and the International Monetary Fund (IMF) staff-level agreement. This setup to the Pakistan’s economy came hours after another US credit rating agency Fitch demoted the outlook for Pakistan’s economy from stable to negative. Meanwhile, US dollar soared to highest-ever value of Rs221.99 as Pakistani rupee slumped by Rs6.79 against the greenback.
As per details, Moody’s said that the deal, which will see Pakistan receive $1.2 billion, will help ease pressures on the country’s dwindling foreign currency reserves.
The credit rating agency warned that soaring global inflation could result in social and political risks in the country.
It also said that the provision of subsidy on power and fuel, and refusal to collect petroleum levy caused difficulties for the national economy.
Earlier, American rating agency Fitch downgraded Pakistan’s economic outlook to negative from stable, citing increasing political instability in the country, weak government unity, and early elections are the reasons for changing the outlook.
The negative rating reflects Pakistan’s deteriorating liquidity and external funding situation from the start of 2022, the report said.
According to the report released by Fitch, there are concerns over the implementation of the IMF agreement and access to funding after June 2023, while foreign exchange reserves are under pressure due to the current account deficit.
Meanwhile, Pakistani currency bottomed out against the US dollar on Tuesday, falling in interbank trading on Tuesday to close the day at an unprecedented Rs221.99.
Interbank closing #ExchangeRate for todayhttps://t.co/pjx8HeEs52 pic.twitter.com/yp6mrPuyaq
— SBP (@StateBank_Pak) July 19, 2022
Per data shared by the State Bank of Pakistan (SBP) on Tuesday, the rupee lost Rs6.79 against the US dollar.
The rupee lost over 3% in a single trading day, according to the SBP.
This was still not as high a single-day loss as the one on March 26, 2020. On that day, when the dollar jumped Rs7 in a single day from Rs160.0 on March 25 to Rs167.6 on March 26.
This came a day after the US dollar had reached an all-time high of Rs215.20 in interbank trading as per data released by the State Bank of Pakistan.
The rupee has lost around Rs38.07 of its value since the government led by Shehbaz Sharif took over in April. By comparison, the rupee had lost around Rs58.88 rupees in value during the past four years under the government led by former Prime Minister Imran Khan.
Political commentators, businessman, and politicians have wanred the Shehbaz led government that the country could be in dire straits if the decisions weren’t made on time.
Journalist Kamran Khan wrote on his twitter “Exchange rate is in freefall, every bank has setting the dollar price at will, just now a bank traded dollar at Rs230 in a deal, the country is in a mess while PM Shehbaz Sharif and Asif Zardari are busy in government rescue operation.”
اس وقت ایکسچینج ریٹ FreeFall کیفیت سے گزر رہا ہے ہر بینک اپنی منشا کے مطابق ڈالر کی قیمت لگا رہا ہے ابھی ابھی ایک بینک نے 230 رپے ڈالر کی ایک ٹریڈ کی مارکٹس میں انتہائی دگرگوں صورتحال ہے لاہور ماڈل ٹاؤن میں وزیر اعظم شہباز شریف آصف زرداری حکومت بچاؤ حکمت عملی ترتیب دے رہے ہیں
— Kamran Khan (@AajKamranKhan) July 19, 2022
Asad Umar in a video message said “Rupee in a free fall. This political uncertainty is bleeding the economy and inflicting tremendous pain on the people. Time to stop this badly conceived, badly executed, totally gone wrong experiment. Pakistan cannot be made to suffer any more for poor decisions.”
بروقت فیصلہ نہ کیا گیا تو ناقابل تلافی نقصان پہنچ سکتا ہ
کرنسی مارکیٹ میں انتہائی خطرناک صورتحال پیدا ہو رہی ہے , پاکستان کو اس صورتحال سے شدید نقصان پہنچ رہا ہے ،اسد عمر pic.twitter.com/xTWkmnHsP5— Abbas Shabbir (@Abbasshabbir72) July 19, 2022
Another feather in Miftah’s crown. Fitch downgraded Pakistans outlook to ‘negative’ from ‘stable’ pic.twitter.com/zdVx4QMDPh
— Muzzammil Aslam (@MuzzammilAslam3) July 19, 2022
Commenting on Pakistan’s downgraded rating by Fitch, PTI’s spokesperson on economy and finanice Muzzammil Aslam said “Another feather in Miftah’s crown. Fitch downgraded Pakistans outlook to ‘negative’ from ‘stable’.”
