Karachi - The Pakistan rupee plunged Friday to a new record
low of 78 against the US dollar on global financial jitters and
domestic economic woes, traders said.
The rupee closed at 78.00-05 against the dollar in both the open
and inter-bank markets as compared with 77.70-80 on Thursday.
Traders said lack of inflow of foreign currency and import
pressures were the main reasons for creating a shortage.
They said the weakness in major global financial markets would
further decrease foreign investors' interest in small emerging
markets such as Pakistan, which is facing a myriad of economic
problems.
The current account deficit ballooned to 2.5 billion dollars in
July and August, gross domestic product (GDP) in June and July, the
first two months of the 2008-09 fiscal year was at about 1.6 per
cent, compared with a 6 per cent target for the entire year.
On Thursday the State Bank of Pakistan also revealed new foreign
exchange reserves, depicting a decline of 189 million dollars to 8.9
billion, barely enough to meet two months of imports.
Traders also blamed the central bank for the shortage as it is
mopping up dollars from the inter-bank market to sell them to
importers at a profit in the future.
Furthermore, rising tensions with the United States, the single
biggest donor to the country, over cross-border violations means
delays in multilateral aid.
Pakistan desperately seeks foreign aid and investment to avoid
financial default in several billion dollar external loans.
The rupee has already been devalued around 21 per cent since
January while the foreign exchange reserves with the central bank
lost over 6 billion dollars in the same period.
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