The rupee failed to find bottom in the inter-bank market on Tuesday, as it lost another Rs1.85 reaching a new low of Rs151.50 to the US dollar on the fourth consecutive day.
Cumulatively, rupee has weakened by over seven per cent, or over Rs10 in the four days.
The State Bank of Pakistan (SBP) said that in its view the recent movement in the exchange rate reflects the continuing resolution of accumulated imbalances of the past and some role of supply and demand factors.
“The exchange rate… came under pressure in the last few days,” the central bank said in its latest monetary policy statement issued on Monday.
“SBP will continue to closely monitor the situation and stands ready to take measures, as needed, to address any unwarranted volatility in the foreign exchange market,” it said.
Since the second last monetary policy statement issued in March-end, “the exchange rate has depreciated by 5.93 per cent to PKR 149.65 per USD, at the close of May 20, 2019, reflecting a combination of underlying macroeconomic factors and market sentiment considerations,” it elaborated in the statement.
Experts said the drop in rupee was expected, as the government had agreed to leave inter-bank market free from state control under the IMF 39-month loan programme with $6 billion for Pakistan.
The government signed the loan programme on the second last Sunday (May 12).
IMF had conditioned to let the market forces decide rupee-dollar exchange rate going forward. Implementation of this condition was a must to agree IMF board to give its final approval for the loan programme.
There was speculation in the market that the rupee may drop to 165-170 to the US dollar under the current cycle of depreciation.