Rupee loses ground, weakens 1% against dollar

Market talk suggests currency will settle between Rs135 and Rs140 by mid-Dec

KARACHI: The Pakistani currency retreated 1% to close at Rs133.25 against the US dollar in the inter-bank market on Monday, according to dealers.

“Pressure on the rupee mounted following conflicting reports that the US is interfering in the IMF bailout for Pakistan,” said Pakistan Forex Association President Malik Bostan while talking to The Express Tribune.

The United States has said that Pakistan’s request for an International Monetary Fund (IMF) bailout package would be closely examined as “part of the reason that Pakistan found itself in this situation is Chinese debt”.



Later, Finance Minister Asad Umar clarified that if the IMF loan under consideration was not in Pakistan’s favour, then Islamabad would not opt for it.

Besides, market talk suggests that the rupee will settle somewhere between Rs135 and Rs140 to the greenback by the time Pakistan concludes talks with the IMF for a bailout by mid-December.

The rupee remained volatile in the inter-bank market during the day. It opened at Rs131.9 and hit an intra-day low of Rs133.88, before closing at Rs133.25.

Last week, the rupee faced a sharp drop of 7.68% to Rs133.8, but recovered somewhat to Rs131.93 on Friday. This was the fifth round of massive rupee depreciation since December 2017. The rupee has so far lost 26.3% of its value in the past 10 months.



In the open market too, the rupee on Monday weakened 0.75% to the greenback and closed at Rs133.3.

Pakistan is yet to formally kick-start negotiations with the IMF to avoid default on import payments and debt repayments in the near future.

Pakistan’s foreign currency reserves dropped to a critically low level of less than one and a half month of import cover at $8.3 billion as on October 5, 2018, according to the State Bank of Pakistan (SBP).