Sep 19, 2008, 10:57 GMT
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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