As the local currency of Pakistan plunged to an unprecedented low against the US dollar, the State Bank of Pakistan (SBP) issued a statement on Friday refuting claims of an imminent emergency meeting of the Monetary Policy Committee (MPC). The central bank vehemently denied the accuracy of reports circulating in the media regarding the supposed convening of such a meeting, categorizing them as entirely groundless.
The backdrop for this denial was the alarming depreciation of the local currency, which had dropped to Rs305.54. This marked a substantial decline of Rs1.09 in the interbank exchange rate on Thursday alone. Meanwhile, in the open market, the US dollar was commanding a price of over Rs320, further exacerbating concerns about the currency's weakness.
Adding to the economic unease, the Pakistan Stock Exchange (PSX) experienced a substantial downturn on Thursday, with the benchmark index plummeting by more than 2%. This drastic decline was a manifestation of deep-seated anxieties about the deteriorating economic landscape of the country.
In response to the escalating rupee-dollar exchange rate, investors reacted with panic, choosing to divest their holdings out of fear that an impending economic crisis could wreak havoc on their investments. This environment of uncertainty and volatility in both the currency and stock markets has put significant pressure on Pakistan's financial stability.
The SBP's denial of an emergency MPC meeting underscores the central bank's commitment to managing the situation while attempting to quell speculative rumors that might further exacerbate market turmoil. Nevertheless, the ongoing fluctuations in the currency and stock markets continue to underscore the challenges Pakistan faces in stabilizing its economic outlook.
As the nation grapples with these economic concerns, it remains to be seen how the government and central bank will address these issues and restore confidence in the financial markets. The coming weeks and months will likely prove pivotal in determining the trajectory of Pakistan's economic recovery