Pakistani rupee falls to record law against dollar
On Friday, Pakistani rupee came down to record low against the greenback. Many dealers blame the global financial crisis and weak economic fundamentals for the weakening of the rupee.
While the rupee was found trading at 78.15 rupees, it was cited down at 78.00/10 around noon. Pakistani currency had a previous day’s close at 77.65/75. Many believe that the central bank’s operation of buying/swapping has made market go short of dollars. Dealers say that with a commitment of selling dollars back, central back has been busy buying the currency in active market.
Any scope of intervention from central bank has been flattened down by the declining foreign currency reserves; also market is growing more anxious with fewer inflows from lenders. Dealers also believe that the concern in the market has been aggravated due to stress between Pakistan and US regarding the movement of US military in the Asian country.
Following the weakening balance-of-payments situation, Pakistani currency had lost nearly 21 percent against the American currency. According to information released on Thursday, the total foreign currency reserves of the country had gone down to $8.91 billion on September 13, which is around $190 million down from the previous week.
According to State Bank of Pakistan (Central Bank), it reserves went down from previous level of $5.72 billion to $5.52 billion. The bank also said that reserves in possession of commercial banks moved up a bit from $3.38 billion to $3.39 billion. After touching a record high with $16.5 billion last year, foreign reserves of Pakistan have been worn out by elevating oil import prices as well as withdrawal of money by foreign investors due to uncertainty in political scenario of the country.
In the first two months (July and august) of fiscal year of 2008/2009 the shortage in existing account grew to $2.572 billion, which is equal to 1.6 percent GDP or gross domestic product as compared to the yearly objective of 6.0 percent GDP.
According to analysts, the existing account for July and August is disturbing and actions to cut down imports are necessary. Compared to yearly objective of 12 percent for this economical year, August’s consumer price index moved up to 25.33 percent.
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