As a consequence of falling foreign exchange reserves the Pakistani rupee lost 5.7 per cent of its value against the US dollar in inter-bank trading on Monday, with the greenback being traded at Rs128.50 in the market towards day’s close.
Meanwhile, the selling rate in the open market climbed up to Rs130 while the greenback remained short in supply.
On Saturday, State Bank of Pakistan (SBP) Governor Tariq Bajwa had denied any move for devaluation. On the same day, caretaker Finance Minister Shamshad Akhtar had stated that the preparations to approach the International Monetary Fund (IMF) were underway.
Malik Bostan, one of the largest currency traders in the country, stated: “Devaluation has never helped external deficits. With each devaluation, the deficits grow faster still.”
He added that the law and order situation in the country needs to improve and warned “Pakistan is sinking into quicksand.”
“Borrowing is the only way out and IMF and China are the only two options,” he stated.
Expressing his fears for the future of the country’s weakening economy, he said that he hoped China or IMF would help provide stability “otherwise, the risks are very serious”.
The rupee’s value against the dollar has been depreciating since the government, in talks with the IMF, decided to devalue the currency. Dawn