By Muhammad Luqman
US dollar appreciated by 5 percent against Pakistan rupee on Friday and was traded at Rs 142 in the interbank market, showing an all time high level against South Asian nation’s currency.
“ Steep devaluation of Pak rupee is due to policies of the previous government that tried to keep the value of the currency artificially high against US Dollar,” Pakistan’s Finance Minister, Asad Umar told a news conference in capital , Islamabad.
Experts attribute rupee’s persistent weakness to balance of payment crisis and dwindling foreign exchange reserves, according to media reports.
Muhammad Sohail, an economic expert, feared that Pakistani rupee could slump to as low as Rs 150 per dollar in the coming weeks.
With the devaluation of rupee, the external debt on Pakistan swelled by a staggering Rs 760 billion, according to Geo News.
Zaffar Paracha, General Secretary of the Exchange Companies Association of Pakistan (ECAP), told DawnNewsTV that the sudden devaluation of rupee has created a panic in the market. He said that the traders are expecting the open market to open at around Rs143 to Rs144.
He said that the devaluation was expected due to the current dialogues between the government and the IMF. “It seems a continuation of the IMF’s condition for a bailout package,” he added.
Paracha demanded of the government to properly announce the devaluation to end the panic among currency dealers.
The development comes a day after Pakistan Tehreek e Insaf government presented its 100 day performance.
The devaluation is set to cause an increase in inflation and interest rate , effecting investment in the country.
Rupee devaluation has attracted ire from the opposition especially Pakistan Muslim League N. Marriyum Aurangzeb, former federal minister and senior leader of the PMLN, condemned the latest devaluation of rupee and called it a robbery committed by the government.
She said it was another fraud by government which she said endorses opposition’s stance that it hits from behind.
It is the one of the major devaluation strikes against the local currency during the Pakistan Tehreek-i-Insaf-led (PTI) government in the country.
Earlier on Oct 9, 2018, the value of the dollar had shot up by Rs11.70 in the interbank market during trading before closing at Rs133.64. It had closed the previous day at Rs124.27 to the dollar a day earlier.
The State Bank of Pakistan (SBP) had explained the move as reflective of current account dynamics and a demand-supply gap in the foreign exchange market. The top bank had stated that it will continue to closely monitor the situation and “stand ready to intervene” in case of any unwarranted volatility in the foreign exchange market.
During the two months of the caretaker government, the local currency had been devalued to Rs130 per dollar from around Rs102 per dollar. The dollar was traded at Rs130 just before the general elections.
Earlier, in December 2017 and in March 2018, the rupee was devalued, each time by about 5pc, by the central bank.