Rupee nosedives 7.5% to record low at Rs144 in inter-bank

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A currency dealer counts US dollars at a currency exchange shop in Islamabad. PHOTO:AFP
KARACHI: In line with the International Monetary Fund (IMF) conditions, Pakistani currency weakened 7.5 per cent to record intra-day low of Rs144 to the US dollar in the inter-bank market on Friday.

“Yes, there is a movement in the rupee,” State Bank of Pakistan (SBP) spokesperson Abid Qamar confirmed to The Express Tribune.

On Thursday, the rupee closed at Rs133.99 in the inter-bank market. This is the sixth round of rupee depreciation since December 2017.

Cumulatively, the rupee has dropped 36.5%, or Rs38.5, to date in the last 11 months.

The fresh devaluation in rupee is seen ahead of the expectations of the central bank increasing the benchmark interest rate by one percentage point to 9.5% by the day’s evening.

Qamar said it is very difficult to quote a current accurate price of the rupee against the dollar at this point in time, as different banks trade the currencies at different rates throughout the day.

The central bank would publish an average price of rupee against the dollar in the evening. The IMF recently conditioned Pakistan to devalue its rupee to Rs145-150 to the greenback, as Pakistan remained in talks with the international financial institution for a bailout package of around $6-12 billion.

“Yes, IMF conditioned rupee devaluation. The fact of the matter is that there was no other option left, but to devalue rupee to avoid default on international payments,” said Pakistan Forex Association President Malik Bostan.

He said Pakistan has received a sluggish response against its efforts to acquire a soft loan from friendly counties to avoid IMF bailout and the default too.

The situation left no option but to devalue currency to avoid default on import payment and debt repayment. Pakistan is to pay around $9 billion in debt repayment by June 2019.

On the other hand, its foreign currency reserves continued to stand near and around the recent four-year low at $8.06 billion as on November 23, 2018, despite the fact that Saudi Arabia has parked $1 billion in the reserves.

Riyadh would park another $2 billion in the next two months under its friendly financial package worth $6 billion ($3 billion in cash and a credit line of another $3 billion for the supply of petroleum products to Pakistan).

Bostan said open market is strictly following the inter bank for buying and selling dollar at retail counters.

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