Pakistan’s currency is on track for its worst week in more than two decades, reflecting investors’ worries that the country risks following Sri Lanka to become the next emerging economy to default on foreign repayments. The nearly 7 per cent tumble of the Pakistani rupee to Rs226 to the dollar by Thursday marked the latest setback for the currency, which has fallen sharply this year. If there is no recovery on Friday, it would be the rupee’s sharpest weekly fall since November 1998.
The latest slide reflected mounting concerns that a $1.2bn loan disbursement from the IMF agreed last week might not be enough to avert a balance of payments crisis. Pakistan’s bonds have been among the worst performers in emerging markets this year.
Sri Lanka’s economic collapse and default on its foreign debt in May led to a full-blown political crisis last week, forcing then-president Gotabaya Rajapaksa to flee mass protests into exile. Sri Lanka’s fall was one of the most stark manifestations yet of a broader fragility in emerging markets, which are feeling the brunt of greater risk aversion among investors and higher commodity prices and interest rates.
Pakistan’s rupee falls fast as default fears intensify
Currency posts worst week in more than two decades amid concerns IMF deal will not avert crisis
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