By Muhammad Luqman
Pakistan’s rupee further plunged to hit an all time low of Rs150/dollar in the open market on Friday despite government’s claim of stalling the slide of rupee against greenback. On Thursday, the dollar was traded at Rs147.
The greenback gained by another Rs2.48 in the interbank market to reach the latest peak of over Rs150.
The rupee had plunged around five percent in an intraday trade on Thursday to hit an all-time low of 148/dollar in an apparent devaluation by the central bank as a ‘prior action’ to satisfy the IMF to secure an approval of $6 billion bailout package, according to media reports.
The rupee, however, slightly recovered to close the day 3.6 percent weaker at 146.52 in the interbank market.
Analysts said the devaluation has added up around Rs667 billion in Pakistan’s external debt, and the forex reserves also dwindled accordingly.
The fall reflects the IMF’s condition for a “market-based exchange rate mechanism, which will see limited intervention by the central bank now,” said Saad Hashmi, chief economist and research director at Topline Securities, Karachi.
The stock market also declined on Friday, with the benchmark KSE-100 index shedding 804.5 points to close at 33,166.6, down 2.4 per cent.
With the economy facing a sharp slowdown in growth, the government is expected to have to raise taxes or impose heavy spending cuts to reduce its ballooning budget deficit at a time when household budgets are increasingly squeezed.
The SBP, which is due to announce its latest interest rate decision on Monday, said late on Thursday that its foreign exchange reserves fell $138 million in the week ending May 10 to $8.846 billion, less than needed to cover three months of imports.
