KARACHI: The rupee fell to record short for third in a row session on Thursday spurred higher import payments and fuzzy economic policy on building foreign exchange reserves.
On the interbank market, the local currency ended at 191.77 k dollar, down 0.91 percent or 1.75 rupees from 190.02 on Wednesday. rupee extended losses in Open market also. It ended at the level of 193 people. dollar in comparison with previous close of 192.50.
“It was hard dollar demand in in last a few days, and importers, especially buyers of oil aggressively bought dollars,” said the foreign exchange dealer. “Inflows are not sufficient to meet the needs of importers. demand”.
Slide of the local unit continued to be weighed down tide trade deficit, reduction in foreign exchange reserves and delay in release of Tranche of the International Monetary Fund (IMF). Political uncertainty also took duty on rupee.
Fahad Raouf, head of research Ismail Iqbal Securities said a major reason for cooler decline in currency was the uncertainty in the renewal of IMF loan program.
“There should soon be announcement from government after the London meetings with relation to the economic plan, which will dictate future well of in economy and PKR,” Rauf said. “If a government ready to take on difficult but necessary steps (removal of energy subsidies), the rupee will stabilize.”
Statement by PPP co-chairman Asif Ali Zardari that the elections in country will run after the incumbent coalition government implements electoral reforms and amends laws on the National Accountability Office. also affected investor sentiment.
Investors are watching closely events in London, where Prime Minister Shehbaz Sharif and top PML-N leaders met. with party Supreme Nawaz Sharif to complete strategy for managing economic challenges such as revitalization of IMF assistance and funding from Saudi Arabia, the United Arab Emirates and China.
Regardless of the specifics of result of in meetings, traders expect the conclusion to be that government would do everythingout efforts to obtain dollar receipts from the IMF and three friendly countries, thus providing the basis for foreign exchange reserves and currency to recover from the ongoing decline.
If a government does not reveal its economic roadmap, the rupee may hit Another record short in days ahead, according to dealers.
Pakistan needs $10-12 billion foreign exchange inflow on direct basis as trade the gap has grown and is likely to widen to $50 billion. in in next two months.
countries trade the deficit jumped 65 percent up to $39.3 billion in 10 months of this fiscal year among higher import. In April trade the gap has grown 24 percent year-on-year up to 3.74 billion dollars.
Dealers announced panic buying of dollars from people in absence of sellers continued to put pressure on rupee in border market. It increased demand caused deficit of U.S. dollar in to marketdealers added.
