Pakistan rupee hits record low as woes mount for Imran

Pakistan rupee hits record low as woes mount for Imran
Pakistan rupee hits record low as woes mount for Imran

The Pakistan rupee tumbled by almost 6 per cent in early trade on Friday as the country negotiates a multi-billion bailout package from the International Monetary Funds (IMF).

The currency dropped as low as 144 against the US dollar (39.23 against the UAE dirham) in open market to reach an all-time low. It recovered to 141 in the late trading, a decline from 133.90 a day earlier. The rupee also slumped in inter-bank market to 140 against the US dollar (38.14 against the dirham) on Friday afternoon from 134 on Thursday.

The KSE-100 index of Pakistan Stock Exchange dropped 0.35 per cent, or 40,496.03 points, in a lacklustre trade with Rs22 billion market capitalisation.

It was the 6th currency devaluation (second in the PTI government since August) in the past 12 months as the State Bank of Pakistan, the central bank, stayed on the sidelines due to dwindling foreign exchange reserves that stood at $14.57 billion on November 23 despite an increase of $776 million due to official bilateral inflows following successful financial talks with the UAE, Saudi Arabia and China in past six weeks.  

Muzzammil Aslam, former CEO, EFG-Hermes Pakistan, said rupee is under pressure due to unbalance trade as there is a wide gap between $60 billion imports and $24 billion worth of exports.

"The rupee has already devalued about 28 per cent this year and today's devaluation of around 6 per cent will only add inflation and increase foreign liabilities of the country. Pakistan's overall debt has now increased by around 15 per cent from Rs26 trillion to Rs31 trillion during the first 100 days of the PTI government," Aslam told Khaleej Times.

Meanwhile, the central bank on Friday hiked key interest rates by 150 basis points to 10 per cent effective from December 3, and sharply cut growth forecasts, warning that the economy faces mounting headwinds from rising inflation and high current account and fiscal deficits. "Continued inflationary pressure (and rising inflationary expectations) needs to be checked," the State Bank of Pakistan said in a statement.

Average headline inflation during the first four months of the fiscal year 2018/19 (July-June) rose to 5.9 per cent compared to 3.5 per cent in the corresponding period last year.

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