Rupee Traded At Rs. 128 Against Dollar
Rupee Traded At Rs. 128 Against Dollar: Dollar flight continued unabated and made heavy dents in the domestic currency for the fourth time since December and on first day of the new week received a fresh jolt dropping by almost 5.3 percent.
The rupee at the interbank started journey with a bang and during the mid-session it around 125 and in just few minutes it gained Rs 3.50 to a dollar. But pressure mounted and banks in haste wanted to buy available dollars from the market which accelerated the pace and it closed at Rs 128, where green back gained almost Rs 6.45 or 5.3 percent.
One day gain in dollar expected to add pressure on the debt repayments schedule where the economic managers has to arrange Rs 580 billion to clear pile of debts. Since December, the rupee saw volley of four depreciation of an average more than four percent in single session. Where according to analyst the currency in the past depreciated by five percent in per annum some five years back.
Since December dollar registered an increase of Rs 22.50 or 21 percent while debt payment pressure rose by Rs 2000 billion. An analyst said that pressure on the currency mount following the speech delivered by the care taker finance minister Dr Shamshad Akhtar that spade work to enter in IMF would be prepared by the present government so that new government if they want to enter the program they could easily sail.
“This was enough to hint that all not well with the economy as reserves have fallen sharply since October and now the country less than one and half months to cover the import bill”, said the same analyst.
The Pakistani rupee dropped sharply in early trade on Monday in what appeared to be devaluation by the central bank, two market analysts said, the fourth such intervention since early December.
The currency was trading at around 125/126 per dollar at 10.30 am local time (0530 GMT) after closing at 121.5 per dollar on Friday.
“It looks like the central bank was prepared to do this and this rate is here to stay for now,” said one of the analysts, who spoke on condition of anonymity.
“Market forces are driving the exchange rate,” Abid Qamar, the central bank spokesman, told Reuters via text message.
The State Bank of Pakistan (SBP) usually makes an announcement about devaluations a few hours after they take place.
Pakistan’s economic fundamentals have deteriorated ahead of the country’s July 25 general election, with most financial analysts expecting the next government will need to seek a post-election bailout from the International Monetary Fund (IMF).
Pakistan’s current account balance has been widening sharply, while foreign currency reserves have plummeted over the past few year.
The central bank last devalued the rupee by about 4 percent in June, after weakening the currency by about 10 percent during interventions in March and December.
Traders say the SBP devalues the currency by withdrawing support in the rupee market. This has the effect of weakening the currency as the SBP is the most influential player in the thinly-traded local foreign exchange market and controls what is widely considered a managed float system.
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