The depreciation of the Pakistani currency took place amid fears that Prime Minister Nawaz Sharif would be disqualified later this year.
ISLAMABAD – The Pakistani rupee lost 3.2% of its value against most major currencies on Wednesday while the Karachi stock market suffered losses on Thursday as political uncertainty plagued the country.
The depreciation of the Pakistani currency took place amid fears that Prime Minister Nawaz Sharif would be disqualified later this year over the legal wrangle related to the Panama Papers scandal.
On Wednesday, the rupee suffered its biggest one-day loss since 2008 and closed at its lowest value in three-and-a-half years. On the same day, Sharif’s daughter Maryam Nawaz appeared before a Joint Investigation Team inquiring into the family’s assets.
In the coming weeks, a three-judge special bench of the Supreme Court, constituted to implement the apex court’s April 20 verdict in the Panama Papers case, is expected to examine the final report of the JIT tasked to probe alleged illegal properties of the Sharif family.
These developments have caused uncertainty in the markets.
“This is an earthquake for the currency market and badly shakes investor confidence,” Forex Association of Pakistan president Malik Bostan told the media.
Finance minister Ishaq Dar ordered an inquiry to investigate the depreciation of the rupee. He told the media he believed the currency had been unfairly manipulated by vested interests who want to show the Sharif government in poor light.
Dar has been a big supporter of a strong rupee and since taking office in 2013, the ruling PML-n party has tried to keep the rupee stable.
However, his stance has been bitterly opposed by exporters who think artificial support to the rupee is creating problems for Pakistan’s exports at a time when regional competitors have devalued their currencies to support their exports.
