The Pakistani rupee, on Monday, sank to historic low level of 99.95 to a dollar in the open currency market, over forex reserves fears as the country repayed $146 million to the International Monetary Fund.
During the day’s trade, the exchange rate neared 100 rupees to a US dollar in the open market. The Rupee was down from 99.30 on the Friday open market, and has now lost 39% of its value against the US dollar since March 2008
“This is the first time the rupee has weakened to beyond the 100 rupee mark and it happened today in the open market where the dollar traded around 100.1 rupees,” Intikhab Ahmed, an analyst at Capital Investments said.
The country had been indebted with $10.7 billion IMF loan until September, but had drawn only about a third of it. The government of Pakistan has indicated it would not seek a new loan. $375 million of the remaining unpaid debt is scheduled to be repayed on February 26, said Syed Wasimuddin, spokesman for the country’s central State Bank.
“The foreign exchange reserves have declined to $8.7 billion as of January 31 from $10.8 billion at end-June 2012,” said the central bank of Pakistan in a statement last week.
The official inter-bank rate for the dollar is 98 rupees, but Mohammad Sohail, who heads brokerage firm Topline Securities, confirmed it had crossed 100 on the open market.
“The rupee is likely to remain under pressure because of IMF repayments,” said Sohail.
Investors have shown their concern over the frequest depletion in the foreign exchange reserves, said Pakistan’s currency experts.
According to a local news source, the increase in the value of dollar against Pakistani rupee is going to menifest itself in the form of price hike. Direct consequences will be commodities becoming even more expensive, especially petroleum products, while Pakistani students abroad will see education becoming more expensive.