Legislation has been introduced in the US on Tuesday, September 28, 2021, to ban the Taliban and governments supporting it. Its impact began unfolding in Pakistan as the stocks of Pakistan companies plunged and the Pakistan Rupee weakened to an all-time low after the U.S. senators passed a bill to seek a quest into Islamabad’s professed role in the Taliban’s takeover in Afghanistan.
The central bank data showed that Pakistan’s rupee weakened 0.3% and closed at 170.48 per Dollar. The benchmark KSE-100 index dipped the most, since March 2020. Adnan Khan, head of international sales at Intermarket Securities Ltd., said from Karachi that the investors are concerned about the restrictions on Pakistan after the proposed bill in U.S. Senate.
Pakistan stocks plunge and the rupee hits a record low on concern of potential U.S. sanctions https://t.co/Hz9DMLr7lO
— Bloomberg Asia (@BloombergAsia) September 29, 2021
According to Risch, The bill would authorize prohibitions on those providing support to the Taliban, including the foreign governments. Despite everything in this legislation’s prospects, there were exasperations in Washington over the international relations with Pakistan. Any further deterioration by Pakistan could hamper Prime Minister Imran Khan’s efforts to revive a loan program with the International Monetary Fund, which was suspended earlier.
In a statement on Wednesday, Pakistan’s foreign minister Shah Mahmood Qureshi declared the draft of U.S. legislation as “uncalled for and counterproductive”. He said that the proposed bill included references to Pakistan, which were completely unjustified.
The economic experts said that with the demand for the Dollar rising, its price is going up. The increase in imports put pressure on the Rupee, which sheds its market value compared to the Dollar.
Smuggling of money
In Pakistan, the license is issued by the State Bank to buy and sell foreign currencies, including the Dollar, but some illegal money changers are also involved in this trade. This trade is operated in the grey market.One of the dominant reasons for this historic fall of the Pakistani Rupee against the Dollar is the rise in the import bill, the trade broadening and current account indebtedness and the negative impact on the country’s exchange rate.
However, with the increasing pressure on the Rupee due to more imports, Afghanistan is also pushing up the value of the Dollar against the Rupee.
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