KARACHI: The rupee remained stable against the dollar at Rs128.4/128.6 in the inter-bank market on Monday compared with Friday’s close of Rs128.4/128.6. Contrary to the impression created after the previous round of depreciation, the Pakistani currency weakened further by 5.7% in its fourth round last week. Since December, the rupee has cumulatively lost close to 22% of its value after the central bank reportedly abstained from intervening in response to the pressure due to a widening current account deficit. The State Bank of Pakistan has maintained that the slide in the rupee’s value is due to supply and demand dynamics of foreign exchange in the inter-bank market. While it has promised prompt intervention in case of speculative or momentary pressures, the central bank will sit on the fence and let “market-driven adjustment in the exchange rate to continue to contain the imbalance in the external account and sustain a higher growth trajectory”, according to a press statement. Market rumours suggest the move is part of IMF’s conditions for another bailout package.
Published in The Express Tribune, July 24th, 2018.