The dollar is flying high in the inter-bank market after the Pakistani rupee registered a steep fall of Rs. 8 against the US currency.
The dollar stood at Rs. 134 at the market closure on Thursday; it is now being traded at Rs. 142 in the market.
The sudden rise of the US dollar has badly affected Pakistan’s foreign debt as well.
With the rupee’s devaluation, it is estimated that the external debt held by Pakistan has risen by Rs. 760 billion.
Experts believe that the country’s balance of payment crisis and falling foreign exchange reserves are the primary cause of currency’s devaluation.
Muhammad Sohail, an Economic Expert, said while speaking at a local TV channel that in the coming weeks, the rupee could slump to as low as Rs 150.
Some experts state that rupee’s weakness may be because Pakistan has still not received a bailout package from IMF due to strict conditions.
The Finance Minister, Asad Umar, however, believes that the country’s balance of payment crisis has been cut to half and that Pakistan did not need to approach IMF for a loan during this point in time.
This is the second time in 7 days that the dollar has touched record highs. On Friday, November 23, the US currency rose to Rs. 135.30 in the open market.
Update: Rupee Regains Footing
The rupee regained its value against the US dollar after day-long volatile trading on Friday.
In the morning session, rupee plunged to as low as Rs. 144 against the US bill. This was the sixth devaluation in the space of a year.
However, it regained footing and was trading at Rs. 136 against dollar when the market closed, market participants said.
“Today is a circus,” said one market participant. “Let’s hope there’s some sanity (soon).”
Earlier, the Finance Minister, Asad Umar had stated that the dollar’s value surged because of the government’s decision to provide subsidies to the foreign investors.
He further mentioned that it is the State Bank of Pakistan which determines the rupee-dollar exchange rate, not the government.
This is story was updated to include the latest updates from the market.