Pak rupee settles at Rs 137 against dollar in interbank market, depreciates Rs 2.10

Local currency touches Rs 142 in interbank market during Friday trade

KARACHI:: The rupee on Friday morning, which depreciated by a record 5 per cent to Rs 142 against the dollar in the inter-bank market, regained Rs 2.10 later on during intraday trading, to close at Rs 137.00.

In the interbank market, the greenback opened at Rs 142 offer rate on Friday morning, but closed at Rs 137, Exchange Companies Association of Pakistan (ECAP) said in its report. However, the State Bank of Pakistan has given its offer rate of US dollar of Rs 138.64 for December 5. The spokesman of the SBP is silent over this issue.

Pak rupee regained its strength and was seen trading between Rs 137–Rs 138 interbank against the dollar.

In the open currency market, the rupee was being traded at Rs 137-138. Most of the currency dealers refused to sell their dollars owing to the fluctuations in the interbank market.

“The government has accepted all the condition of International Monetary Fund (IMF) and it would further devalue its currency,” the industry sources claimed. The SBP may also raise its discount rates by 100-150 basis points to 9.5-10 per cent today.

The IMF had asked the government to devalue its currency and enhance the discount rates to the double digit, if it wants to get further loan from the IMF.

Due to the latest depreciation of the local currency, the total debt owed by Pakistan has risen to Rs 210 billion.

The government has now devalued Pak Rupee by around 22 per cent during the current calendar year and 26 per cent during the last 12 months. Further, since the new govt. has come into power, Pak Rupee is down 8-10 per cent.

A report of the Topline Securities said, “this was much needed as Pakistan’s external Current Account Deficit (CAD) remained higher than expectations.” For the period Jul-Oct 2018, CAD was reported at $4.8 billion (1.6 per cent of GDP) compared to $5.0 billion (1.6 per cent of GDP) last year.

As a result, Pakistan foreign exchange reserves (reserves with SBP) also declined from $9.8 billion in July 2018 to $8.0 billion as of Nov 23, 2018, which is less than 2 months of import cover. This is despite the $1 billion inflow from Saudi Arabia which the country received last week.

Pakistan government held talks with the International Monetary Fund (IMF) for a bailout during Nov 7-21, 2018, where the fund had indicated need for further devaluation in the Pak Rupee as well as hike in interest rates.