KARACHI: The Pakistani currency maintained downturn for the seventh successive session, as it dropped a fresh Rs1.12 to close at a record low of Rs156.96 against the US dollar in the inter-bank market on Monday.
“The recent (June 3-17) depreciation in rupee is seasonal,” State Bank of Pakistan (SBP) Governor Dr Reza Baqir said in his maiden press conference on Monday.
The rupee has weakened Rs9.04 or 6.11% since June 3; the last working day before long Eid and weekly holidays observed on June 4-9.
This is a seasonal pattern as several companies need dollars to make international payments ahead of the closure of their yearly books on June 30, he said.“The pressure on the rupee would remain an ongoing phenomenon, (going forward),” he said.
He elaborated that earlier the central bank used to control the rupee-dollar exchange rate through the supply of dollars from the state’s foreign currency reserves to cater to the corporate demand in the inter-bank market.
The mechanism had allowed the central bank to absorb pressure on the rupee. Now the system is no more in place. It has been replaced with a ‘market-based rupee-dollar exchange rate’ mechanism recently.
The central bank would make no more interventions, but would take action if it finds someone manipulating the rate under the new mechanism. In the new system, the rupee-dollar exchange rate would move both ways.
Earlier during the day, the Pakistani currency moved both ways in a range of Rs156.50-157.07.
Cumulatively, the rupee has depreciated almost 49% since December 2017, according to the central bank.
A currency dealer said speculation within the market suggested the rupee was heading towards the International Monetary Fund’s (IMF) dictated level of Rs160-165.
“Pakistan continues to accumulate more debt to pay off its existing debt. This is not a sustainable solution,” a banker who spoke on condition of anonymity said. “We have to increase our foreign income and the only permanent solution to that is increasing exports.”