KARACHI: A battered rupee fell on another record short on Thursday, fall past 200 k dollar in interbank market continuing to rise sharply as investors worry pace of his fall and absence of support from central bank.
The local unit fell by 1.61 rupees or 0.81 percent against in dollar. The rupee traded at 200.10. in intraday trade. It ended at 198.39. on Wednesday.
In the open market, the rupee traded at 201 against the US dollar, rates published by the Association of Exchange Companies. of Pakistan showed. However, some merchants sold rupees even at a very low price. higher rates of 202-205 in border market.
Analysts attribute the depreciation of bailout negotiation currency with the IMF, which are being in Doha, in addition to strengthening the balance of payments crisis, growing political uncertainty and investor dilution confidence in countries economy.
government negotiations resumed with The IMF will provide the seventh tranche of financial assistance in the amount of $6 billion. package to help support fragile economy.
government is an also seeks to increase the size and duration of loan program as it is in horrible need of external financing amid depletion in foreign exchange reserves. foreign exchange reserves of Central bank declined to 10.3 billion for the week ended May 6, which could span less than two months. of import.
government trying ensure successful and fast completion of negotiations with the IMF, analysts say.
“Possibly temporary relief of rupees if negotiations with the IMF end positively, but the underlying economic fundamentals remain the same,” said Komal Mansour, head of strategy in Tresmarck. “We’re vulnerable enough on outer front.
The sliding rupee has caused anxiety in Pakistan, which already facing a higher trade scarcity and unbridled domestic and foreign borrowing. The country struggling with rapid inflation and rising costs for fuel and power which are both heavily influenced dollar exchange rate.
“Two good developments (which are actually bad for in economy in for a long time run) currency devaluation and interest rate increases, which could please the IMF and therefore help get us back on track with them in in on“Negotiations are underway,” said Khurram Shehzad, CEO of Alpha Beta Core.
government decided to ban on import of insignificant items in an attempt to ease the pressure on foreign exchange reserves and rupee. However, according to analysts, a significant increase in the import bill comes from energy imports.
“Pressure on PKR mainly due to delay in decision on much-needed reforms to eliminate subsidies and import controls,” said Mohammed Sohail, CEO of Topline Securities.
Tahir Abbas, head of research in Arif Habib Limited said that reason for the continued depreciation of the currency is due to the prevailing uncertainty in in market and lack of any economic roadmap government.
National Bank of Pakistan also further increase in interest rates is likely in the coming policy meeting scheduled for Monday to curb inflation and help hinder the exchange rate of the rupee declining further.
