Rupee hits record low for fifth consecutive day

KARACHI: The rupee plumbed record lows against the dollar on Friday, marking the fifth straight day of losses, and dealers said the central bank support is visibly missing to slowdown depletion in battered currency ahead of an approval of IMF bailout package due next month.

The rupee fell to as low as 156.90 to the dollar in the interbank market, before trimming some of its losses to close at 155.84.

The currency touched an intraday low of 157.50 in open market. At the end of the trade, it weakened by Rs2.80 to close at 157.10/dollar.

The rupee has been the worst performing currency in Asia so far in 2019, falling 4.53 percent during the week.

The currency has been beset by a host of factors, with steep devaluation in recent months adding to worries about high inflation, current account and fiscal deficits and rising oil prices.

The rupee’s official exchange rate is supported by the central bank under a de facto managed float system and many analysts said the IMF considers the currency to be overvalued.

Foreign exchange traders said the central bank has completely withdrawn its support for the rupee in daily

market operations and that sent the currency lower on daily basis.

“Dollar demand is there, but there is no check from the SBP (State Bank of Pakistan) as it left the currency up to the market to determine the value,” a forex dealer at a large commercial bank said.

Analyst Yaqoob Abubakar at Tresmark said the persistent slide in the exchange rate was due to high demand for import payment and upcoming IMF payment pressure.

“Further, rupee is vulnerable due to weak foreign currency reserves and wide current account deficit, while traders are sceptical of any material reversal in either of these,” Abubakar said.

The rupee has fallen 27.8 percent since the Pakistan Tehreek-e-Insad government came into power in August 2018. Dealers expect the rupee to trade in the range of 175-180 by the end of this year.

Malik Bostan, president Forex Association of Pakistan said the rupee continued to suffer losses due to higher volatility in the interbank market.

“There are no major buyers in the open market,” Bostan said.

“We sell $5-7 million to commercial banks daily, improving dollar liquidity in the foreign exchange market.” “We provided at least $40 million to the interbank market in the last three weeks.”