The currency of Pakistan, Iran and Turkey is rapidly 'falling upside down', the trouble of the three countries is going to increase
The Pakistani rupee has been falling continuously against the US dollar in the interbank currency market for months. According to local media, this decline is a matter of concern for the Imran Khan government as it suggests that the country is facing a deep economic problem. The Pakistani rupee closed at 175.73 against the US dollar on Friday. Since May 14 and July 1, the rupee has depreciated by 13.34 per cent and 10.35 per cent, respectively. Pakistan's foreign exchange reserves have also declined to US$ 17.3 billion from US$ 19.2 billion in early October.
The delay in restarting the International Monetary Fund's (IMF) loan program is also not helping the neighboring country. At the same time, the Turkish lira has fallen by more than a quarter so far this year, making it the worst performer among emerging markets this year. It lost two-thirds of its value in five years. Due to this, the income of the people of Turkey has declined and inflation has increased.
As of Friday, the Turkish lira reached an all-time low of 9.975 against the US dollar. During the past week, the Iranian rial has also fallen by 2.8 per cent, falling to 31.5 per cent in the past six months. Iran's economy has suffered a lot after the administration of former President Donald Trump pulled out of the nuclear deal.
Pakistan's trouble will increase
Despite restrictions on imports of the State Bank of Pakistan and purchase of dollars in the open market, the Pakistani rupee is falling against the US dollar. According to Pakistani newspaper Dawn, since there is no help from anywhere, there is no possibility of the rupee moving upwards in the coming times. A deal with the IMF is crucial for raising dollars through international bond markets.
The Government of Pakistan will continue to rely on inbound remittances by Pakistanis to meet its current account deficit and will have to slowly deplete money from reserves created through past borrowings, until the latest The loan is not available anywhere.
That's why the concern of these countries increased
Under normal circumstances, currency depreciation is nothing to worry about. Due to high inflation and other economic factors, currencies constantly push their prices down. This helps the country's exports to remain competitive in international markets, increases domestic production and promotes economic growth. However, there is a huge fall in the currency, as is happening with the Pakistani rupee. This shows that the country is facing deeper problems. There are issues like low productivity, limited export options, high import dependence and rising inflation.