Dollar hits historic high at Rs133.64; State Bank to intervene in case of 'unwarranted volatility'
The value of the dollar shot up by as much as Rs11.70 in the interbank market during trading on Tuesday before closing at Rs133.64.
It had closed the previous day at Rs124.27 to the dollar a day earlier.
The State Bank of Pakistan (SBP) explained the move as reflective of current account dynamics and a demand-supply gap in the foreign exchange market.
"Although the current account deficit narrowed in August 2018, a consistent increase in the oil import bill on account of rising international oil prices has exerted pressure in the foreign exchange market," the central bank said in a statement.
"The SBP is of the view that this adjustment in the exchange rate along with lagged impact of recent hikes in the policy rate and other policy measures to contain imports will correct the imbalances in the external account," it continued.
The SBP will continue to closely monitor the situation and stand ready to intervene in case of any unwarranted volatility in the foreign exchange market," it concluded.
The dollar has been on an appreciating trend, reaching Rs124.30 in the interbank market on Oct 5, with rates in the open market reaching Rs127.80 on Saturday.
The interbank rate today rested at Rs124 as the market opened, rose to Rs138, then dipped to Rs133.
For the past few days, the open market rate of the US dollar has been Rs4-5 higher than the interbank rate. The open market rate is Rs134 to Rs135 today, according to General Exchange Companies Association of Pakistan Secretary Zafar Paracha.
Currency dealers fear the alarming increase will fan panic in the market for dollars, causing a buying frenzy for the US dollar.
They speculate that the sudden increase in the price of the USD could be a result of rupee devaluation — the fifth time since Dec 2017 — by the State Bank of Pakistan (SBP) in order to secure a bailout package from the International Monetary Fund (IMF). The Fund has demanded the go nment devalue the rupee by at least 15 per cent.
"The central bank has given an indication to let the rupee go with market forces," a broker was quoted as saying by Reuters. The rupee is widely believed to be under a managed float. However, with the pressure that the currency is facing, observers had predicted further devaluation as they said it would be hard for the SBP to defend it for much longer.
Saad Hashmi, research director for brokerage Topline Securities had said last week: “Given the foreign exchange reserves at the SBP, I don’t think the bank has enough fire power to bring the rate down.”
He added that he expects “a slight devaluation at this point, and then eventually a 135-140 level in the next eight to 12 months”.
Bankers and experts have said that the rupee value in the currency market was already reflective of its true position, suggesting that there was no need for the go nment to further devalue the local currency.
Zafar Paracha had earlier warned that an immediate devaluation could result in market disequilibrium similar to earlier instances when banks were offering high price of dollars and open market trading was much below the official rates.
Forex Association President Malik Bostan advised the go nment to be cautious. "It shouldn't devalue the currency so much that it robs people of their purchasing power," he said.
"They [go nment] are going to the IMF now and they have devalued the currency on the Fund's demand. I think the go nment has shot itself in the foot."
Not all believe that reaching out to the Fund for help is alarming. Suleman Maniya, head of research at Shajar Capital told Reuters that it was a "positive rather than a negative thing" as it would assure stakeholders that the go nment would meet the targets that it sets for itself. The shortage of foreign reserves, though, is cause for concern, according to Reuters.
The state bank’s foreign reserves were down to $9 billion in the week ending Sept 19, enough to cover just two months' worth of imports, down some $300 million from the previous week, according to SBP data.
Though the Finance Ministry has not clarified how much money the country needs in foreign reserves, Finance Minister Asad Umar has said that Pakistan has to make external debt payments amounting to $8bn by December this year.
Pakistan’s economy has been wobbly for months amid speculation that Prime Minister Imran Khan's new go nment would request the country’s 13th IMF bailout since the late 1980s.
A formal announcement in this regard was made yesterday, with the go nment confirming that it would approach the IMF for balance-of-payments support and enter into a stabilisation programme.
Market analyst Muzammil Aslam, while speaking to DawnNewsTV said that once Pakistan would receive funds from the IMF, the economy would stabilise.
市场分析师穆扎米尔·阿斯拉姆在接受Dawn News TV采访时表示，一旦巴基斯坦从国际货币基金组织获得资金，经济就会稳定下来。
"I don't think it will go up to Rs150, the go nment won't allow the economy to spin out of control," he added.
Senior Pakistan Tehreek-i-Insaf (PTI) leader Ali Zaidi said that the jump in the exchange rate would "affect everyone, even us ministers".
"But just bear with it for a while and everything will fall into place," he said.
译文来源：三泰虎 http://www.santaihu.com/46247.html 译者：Jessica.Wu
Free fall. Everything things Will get costlier and costlier.hope the exporter tack benefit out of this and utilize it by earning $
what ishaq dar couldnt do in 5 years, Imran khan has done in 5 weeks. Wow, what an achievement ! Tabdeeli aai hay yaro!
Rs. 150 to Rs. 200 is their target - This means that your salary will now be worth half it is right now. Anyone earning Rs. 50,000 per month would be earning for Rs. 25,000. Bad times.
China investment CPEC is in Pakistan Rupees. You will have to pay back in $. have you thought the cost of pay back in Rupees and how it will increase with devaluation of Rupee.
Umar Bin Ayaz
Lets hope that these bad economic days one day pass away and rupee be valued again as it was used to be in 60s. One thing that must be pointed out is that, Asad Umar is not to be blamed for this, PML-N go nment is.
This means net reserves will directly fall by 10%.7.6 billion to 6.6 billion us dollars.
what is happening to my Pakistan:’(.
To curb import, increase export ,increase foreign remittance ,to correct the balance of payment and to face factual position the long needed correction has been done.Hats off to the PTI go nment.
Pakistan nation rejects this devaluation. The gov has destroyed our savings. The middle class and poor are most effected. We demand something in return. .bring back Musharraf who gave this country the cancer of NRO...then we will assist the gov to overcome these tough times.
This is not because of PTI but because of PMLN. Just wait and see for the day 100, PTI have already done excellent reforms and money is flowing in.
People elected Imran Khan on his anti-co ption campaign when almost everything has been destroyed with 10 years of Zardari & Sharif rule.
PTI only took over few weeks ago. they have to save the sinking ship.
Alarm bells ringing...
Imtiaz Ali Khan
Both India and Pakistani Rupee are getting so badly hurt by US dollar, hitting records lows against the greenback.
Obviously, investor has no confidence in this Govt., Businessmen have no confidence in this Govt, International community has no confidence in this Govt. Hard times ahead!!
I am surprised, PML-N has taken loans too, but dollar was kept at 102-105 for 4 years & 6 Months. Ever since PML-N govt left, Care Taker go nment gave complete control to Market Controller , same is done by this new Govt.