Pakistan ETF Plunges After New Government Asks for IMF Bailout

“Pakistan’s future is in safe hands,” Hussain said. “We will make Pakistan a powerful and stable country.”

Further dragging on the Pakistani market, the rupee currency slipped as much as 10% Tuesday to 137 rupees to the dollar in response to the bailout plea, but it has since regained ground to PKR128.5 to the USD. At the same time, the depreciating rupee will lead to higher inflation.

Tahir Abbas, vice president for investment research at brokerage Arif Habib, argued that traders are anticipating the IMF will want to see the rupee currency to depreciate to around 145 to the dollar. The weaker currency would make the country’s exports cheaper and imports more expensive.

“The IMF will want to see the economy cool off, to reduce demand in order to manage the current-account deficit,” Abbas said.

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