By Muhammad Luqman
Apparently due to fourth devaluation over the last seven months, Pakistani rupee lost more grounds against greenback on Monday with currency trading at Rs 128 per dollar.
“Today, the PKR-US$ exchange rate in the interbank market closed at PKR 128.0 per US$ against the closing level of PKR 121.55 per US$ of the previous day. This movement in the exchange rates reflects the demand-supply gap of the foreign exchange in the interbank market,” the spokesman of the State Bank of Pakistan said.
The central bank will continue to closely monitor the evolving fundamentals of the economy, and stand ready to ensure stability in the financial markets, he maintained.
According to analysts, it seems that the central bank was prepared to do this and this rate is here to stay for a long time.
“Market forces are driving the exchange rate,” Abid Qamar, the central bank chief spokesman was quoted by the news agency Reuters.
Pakistan’s economic fundamentals have experienced deterioration ahead of the country’s July 25 general elections.
Pakistan’s current account deficit has been widening sharply, while foreign currency reserves have depleted over the past few months.
The central bank last devalued the rupee by about 4 percent in June, after weakening the currency by about 10 percent during interventions in March and December, according to media reports.
The industrialists especially the textile mills owners believe that the devaluation of the rupee alone will not work. “ Government has to take more steps to cut down the cost of doing business,” says Anisul Haque, Secretary General, All Pakistan Textile Mills Association (APTMA).
According to financial analysts, devaluation follows the statement of the caretaker finance minister Shamshad Akhtar that we are preparing spade work for entering into the new program with the International Monetary Fund and it will depend on the new government whether to go or not.
The caretaker finance minister met group of senior brokers and members of mutual funds on weekend at Pakistan Stock Exchange where she hinted that the rupee has been driven by market forces, adding, “We can go to IMF but we are not going, will do the spade work for IMF”.
The rupee on first week opened with bang and dollar appreciated by Rs 3.50 in one go, while it has been around 125 rupees level. But as the session passes, rupee showed more adjustment and currently dollar gained nearly Rs 6 to Rs 127.50.