The Pakistani rupee nose-dived Rs5.06 against the US dollar in a single day, hitting a new low of Rs216.01 in the inter-bank market on Monday.
The Pakistan Stock Exchange (PSX) declined 770 points to a one-year low below 41,000 points.
According to experts, capital markets came under renewed pressure following the emergence of fresh “political and economic uncertainties in Pakistan.”
The recent victory by the Pakistan Tehreek-e-Insaf (PTI) in by-elections in 20 constituencies of the Provincial Assembly in Punjab has once again changed the country’s political landscape.
Such uncertainties may put pressure on the federal government as early general elections may be coming up.
Because of this, the International Monetary Fund (IMF) may think about postponing the restart of its $6 billion loan program until there is more clarity about the political situation in the country.
On July 16, the fund announced that Pakistan would receive a $1.17 billion tranche in three to six weeks after the two reached a staff-level agreement.
However, as uncertainty persists and Pakistan’s foreign exchange reserves further deplete to a critically low level of $9.2 billion, a delay in the tranche poses a risk as the country verges on default.