Business

Rupee continues to lose as it drops for 7th successive session

Currency depreciated to record low of Rs156.96 against dollar

Salman Siddiqui June 18, 2019

PHOTO: REUTERS

KARACHI: The Pakistani currency maintained downturn for the seventh successive session, as it dropped a fresh Rs1.12 to close at a record low of Rs156.96 against the US dollar in the inter-bank market on Monday.

“The recent (June 3-17) depreciation in rupee is seasonal,” State Bank of Pakistan (SBP) Governor Dr Reza Baqir said in his maiden press conference on Monday.

The rupee has weakened Rs9.04 or 6.11% since June 3; the last working day before long Eid and weekly holidays observed on June 4-9.

Pakistan fulfills all IMF commitments: SBP chief

This is a seasonal pattern as several companies need dollars to make international payments ahead of the closure of their yearly books on June 30, he said.“The pressure on the rupee would remain an ongoing phenomenon, (going forward),” he said.

He elaborated that earlier the central bank used to control the rupee-dollar exchange rate through the supply of dollars from the state’s foreign currency reserves to cater to the corporate demand in the inter-bank market.

The mechanism had allowed the central bank to absorb pressure on the rupee. Now the system is no more in place. It has been replaced with a ‘market-based rupee-dollar exchange rate’ mechanism recently.

The central bank would make no more interventions, but would take action if it finds someone manipulating the rate under the new mechanism. In the new system, the rupee-dollar exchange rate would move both ways.

Earlier during the day, the Pakistani currency moved both ways in a range of Rs156.50-157.07.

Rupee falls, hits 157 in inter-bank trade

Cumulatively, the rupee has depreciated almost 49% since December 2017, according to the central bank.

A currency dealer said speculation within the market suggested the rupee was heading towards the International Monetary Fund’s (IMF) dictated level of Rs160-165.

“Pakistan continues to accumulate more debt to pay off its existing debt. This is not a sustainable solution,” a banker who spoke on condition of anonymity said. “We have to increase our foreign income and the only permanent solution to that is increasing exports.”

Published in The Express Tribune, June 18^th, 2019.

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COMMENTS (1)

Sajjad | 5 years ago | Reply Most Unreasonable Step with Most Absurd Timing to Free Float Dollar Exchange Rate when Economy was already Shattered, thus Finally "Putting Nail in Coffin". Even if Dollar was to Free Float on Dictation of IMF, it should have been done so after sometime with Professional Planning & Implementation, only after Improvement of our Economy to Effectively Bear it's Negative Effects. This Act not only Increased Debt Amount Exponentially but also has Backfired in Literally Halting Industrial Sectors, whether Local or Export based, due to Extremely increased Input Costs and Hence making Pakistani Products Non-competitive, both in Local & International Markets, as well as Delaying & Creating Losses in Projects, thus Furthering Burden on Pakistan.

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