Pakistani rupee receives another jolt as dollar shoots to Rs115.50 in interbank market

KARACHI - The US dollar rose by Rs4.93 in the interbank market on Tuesday to hit a high of Rs 115.50 before coming down to Rs 115 at the close of business, according to forex dealers.

Pakistan rupee closed around 115 to a greenback from Monday closing of 110.55, down by four percent or Rs 4.45.

The main factor behind this slide has been the economic worries especially the debt profile of the country where external debt risen to 89 billion dollars while widening current account deficit which in seven months of current fiscal year already hit 4.2 percent of the deficit.

Rupee since December has weakened by almost 9 percent which would result in rise in payment on external debt and would be in excess of Rs 850 billion while price of the commodities which being imported would increase.

Economic analysts said prices of fuel and other commodities could rise in the country as a result of the latest increase.

They strongly criticised the drop in the value of the rupee, saying that it would pave the way for inflation, lesser foreign investment in the country and the use of illegal means for transferring money.

The analysts said the country’s foreign exchange reserves are under pressure from the rising current account deficit, adding that the country is paying $200-$250 million every week to pay off foreign loans and other debts. The rise in the dollar rate will have a positive impact on the current account deficit, they added.

On a conservative estimates, price of petroleum products would likely to show an increase Rs 4 to Rs 5 per liter, the price of milk and tea would increase by Rs 30 to Rs 40 per kilogram, while price of pulses to go up by Rs 5 to Rs 7 per kilogram.

SBP monitoring interbank market:

In a policy statement, the State Bank of Pakistan (SBP) said it is monitoring the interbank market.

An SBP spokesperson said that Rupee is falling owing to pressure from import payments, adding that the market is adjusting the exchange rate accordingly.