100 Index succumbed to depreciation pressures in yesterday’s session as it lost more than 600 points on the back of PKR devaluation. PKR became the worst performing currency in the world, second only to the Turkish Lira as the State Bank of Pakistan let the currency fall into ever deepening abyss.

Cement fared worst as a result of devaluation, losing more than 117 points, followed by banking scrips which took away a 106 points from the index witnessing a major selling with volumes of 49.96 million shares despite the buying witnessed before the rate hike. The bearish sentiment was further entrenched by the Government’s announcement of imposing regulatory duty on a range of products to curb imports.

The Rupee plunged to record low of Rs. 128.5 in yesterday’s session as the SBP let PKR dip for fourth time in last six months. The Rupee dropped as much as 5.3 percent to 128 per dollar at the close, according to a release by the State Bank of Pakistan. The depreciations have come as a result of weakening external position of Pakistan’s economy and the falling global interest in global economies. The analysts anticipate a foreign sell-off in emerging markets to continue well into 2018 as US raises interest rates and trade war fears are realized. INR, IDR, and Lira have all succumbed to strengthening dollar.

Many dub this – depreciation – as a smart move from the SBP to appease the International Monetary Fund (IMF). Dr. Shamshad Akhtar, the interim Finance Minister, on Saturday while giving a briefing at the Pakistan Stock Exchange warned that the given the macroeconomic indicators, Pakistan has but only option, to go to IMF for a comprehensive bailout.

She had also hinted at early preparations being taken by the interim government to approach the IMF and analysts believe these measures such as Regulatory Duty, depreciation have all been aimed at fulfilling the prerequisites of loan facility from IMF.

However, these hard hitting measures will change the economic outlook and current economic position of the country. Bodies representing consumer interest have already warned of rampant inflation, extreme rise in cost of living and instability. The rate hake and depreciation have all coincided with the rising global commodity prices especially oil which have soared to their pre 2014 levels.

Pakistan during the period between 2014 – 2017, when the oil prices were at their historic lows, could have taken advantage and let the rupee slide in order to fix the external position. However, due to petty political interests, prudent and long-term policies were ignored in favour of the short term objectives.