The Pakistani Rupee (PKR) crashed below the 240 level against the US Dollar (USD) during today’s trading.
During today’s intraday trading, the rupee is taking a beating after the Supreme Court of Pakistan nullified Hamza Shahbaz’s illegal election as chief minister of Punjab, the country’s largest province on Tuesday and appointed Pervaiz Illahi as Chief Minister elect to oversee the provincial government.
The recent currency tanking has very little to do with the import bill dropping right now. Depreciation takes a while to impact the import bill.
The current decline is mostly because of the Import restrictions, Recession sentiments-rates and budget, Extra inventory and Pricing pass through.
This is not to say that the currency tanking will not have a future impact on the import bill, but the immediate effect is almost certainly not due to depreciation.
I maintain that letting the currency free-fall in this environment was not an optimum approach. There are better ways to effectively eliminate excess purchasing power than heavy imported inflation.
The above were not taken (the timeline to take administrative measures was at least 6 months ago). This brute force depreciation is a product of pent up pressure due to lack of action and subsidies that have been made available for several months now.