Currency weakens further to Rs121 against dollar in intra-day trading

SBP says market forces determining inter-bank rate

KARACHI: Contrary to the impression created after the previous round of devaluation, the Pakistani currency weakened to an intra-day low of Rs121 to the US dollar in the inter-bank market on Monday, a fall of 4.66 per cent, confirmed the State Bank of Pakistan (SBP).

On Thursday, the rupee closed at Rs115.61 in the inter-bank market.

"The market is still in the trading phase… we can't say anything right now as to why the rupee is moving down and where it would get end at the end of the day," SBP spokesperson Abid Qamar told The Express Tribune. "This is a free market where market forces determine the rupee’s value," he added.

However, tradition says Pakistan’s central bank has played a huge role on determining the rupee-dollar parity, as it usually intervenes to keep the rupee stable.

The devaluation comes in contrast to earlier statements as SBP Governor Tariq Bajwa had said the rupee “was trading near its true equilibrium". Miftah Ismail, the then finance minister, had also said that there was not going to be another devaluation as exports have now started increasing.

Monday’s intra-day fall is the third round of rupee devaluation since December 2017. The rupee has already shed 9.5 per cent (5 per cent in December 2017 and 4.5 per cent in March 2018) to the US dollar.

The movement comes as a counter to boost exports and slow down excessive imports as Pakistan looks to tame a widening gap in the trade and current account deficits. The deficit is fast depleting foreign currency reserves of the SBP.

Currency dealers in the open market have also temporarily transactions as they await clarity on the rupee-dollar parity.

PSX remains stable. Unlike in the past, the Pakistan Stock Exchange's benchmark KSE-100 Index did not record sharp movements. It was up 0.15 per cent, hovering around the 44,000-point mark as news came through of the devaluation.