Manila: Pakistan, which is negotiating to restart a $6.7 billion bailout with the International Monetary Fund, is unlikely to devalue its currency again as pressure on the rupee has eased, according to Fitch Ratings.
“We currently do not expect a large further devaluation of the Pakistan rupee,” Krisjanis Krustins, a Hong Kong-based director at Fitch, said in an emailed response to questions sent by Bloomberg news.
“Although the currency has been very stable over the past few months, pressure on the reserves of the State Bank of Pakistan has also been contained, which suggests minimal interventions to support the currency,” Krustins said.
The multilateral lender has said it is working with authorities to fix its currency market and other issues before it resumes the bailout program, which is set to expire this month. The rupee has slumped more than 20 percent this year after officials devalued the currency in January, making it one of the worst performers globally.
The nation’s dollar stockpile has remained stable at about $4 billion since late February, after falling more than 50 percent in the past 12 months. Funds will be crucial to prop up the economy beset by supply shortages and avert a sovereign default, with billions of dollars of debt payments approaching.
“We continue to assume that the IMF and Pakistan will conclude the ongoing programme review, likely after the IMF has clarity on the upcoming budget,” Krustins said. “However, the window for this is rapidly closing, with the programme originally set to expire in June, and substantive progress unlikely in the immediate run up to elections due by October.”
Prime Minister Shehbaz Sharif on Friday also hoped the IMF would resume the stalled bailout programme as the country has already met all prior conditions set by the global lender despite economic hardships.
"The ninth review will be complete soon," the Prime Minister said during his address to the federal cabinet of the coalition government, which presented its second budget.
Washington-based IMF has said it is collaborating with Pakistani authorities to address concerns related to the country's currency market and other matters before resuming the ongoing bailout programme, which is scheduled to conclude this month.
The government moved to put brakes on the outflow of foreign currency from the country and restricted imports to control the outflow of dollars.