The economic crisis in Pakistan is getting worse by the day. The cash-strapped country's currency plummeted to a record low of Rs 255.43 against the dollar on Thursday (January 26) against Rs 230.9 on Wednesday.
This comes after the foreign exchange companies removed a cap on currency, saying that it caused 'artificial distortions' for the the Pakistan economy, which was in a desperate need of International Monetary Fund's (IMF) help.
Why the cap was removed? Removing the cap on the Pakistani rupee-dollar exchange rate was a demand of the IMF as part of a programme of economic reforms it has agreed on with the debt-laden South Asian nation.
How the removal of cap by foreign companies affected the Pakistani rupee? The move by the foreign currency dealers on Wednesday, whose open market rates were different from the rates notified by the Central Bank, had a cascading effect on the official exchange rates.
High inflation in the country: Pakistan is suffering from a severe economic slump, where its foreign exchange reserves have collapsed from $8 billion USD to $4.6 USD, as on January 13.
How bad is the situation? The extent of how bad the Pakistani economy is at the moment can be known from the fact that thousands of shipping containers packed with raw materials for the industry, foodstuffs and medical equipment are being held up at the Karachi port because the banks have refused to guarantee importers dollars transactions.
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