Rupee depreciates- US dollar hits extraordinary record of Rs122 in interbank market

KARACHI: Pakistan’s currency is devalued sharply in the opening of the week as US dollar hits a highest record of 122 for a third time since December by Central Bank.

According to today’s early trade, the rupee dropped as much as 5.1 percent to 121.5 a dollar in trade. Whereas it was observed trading at Rs119.80 in the inter-bank market previously. The main reason for the ramble in the value of US Dollar is mainly increase in imports and a broadening current account deficit.

The rupee was being traded at Rs124 against the greenback in the kerb market on Monday.

On June 1^st, the rupee jumped to a then-record low of Rs119.35 in the kerb market against the US dollar on Friday, as decreasing foreign exchange reserves continued to influence the local currency.

According to data provided by Bloomberg, Pakistan’s currency is the poorest performer in Asia since December before today’s drop.

The drop in Pakistan’s rupee results in Pakistan’s foreign exchange reserves, as its dropped to the lowest in more than three years and the current account deficit widened by 50 percent.

As per foreign exchange dealers, the greenback, which was previously standing at Rs115.63, rose by Rs5.38.

Since the beginning of Ramadan, there is shortfall in the supply of greenback. Furthermore, as per State Bank of Pakistan’s (SBP) decision including the check & identification of all foreign currency buy & sell transactions equivalent or above $500 on exchange companies, they are ordered to collect copies of related documents in order to confirm with anti-money laundering rules. This is the main reason for slowdown of the flow of US dollars in the market.

According to UN report in Early-December, they have already cautioned Pakistan’s policy to keep the rupee stable, because if the US dollar appreciates against other world currencies it will probably corrode the country’s foreign exchange reserves.