Pakistan's rupee suffered another sharp devaluation in the market on Friday, dropping to its lowest value ever against the US dollar at Rs144. This was before the State Bank intervened to raise its level to Rs136.5-137.5. Pakistan’s Finance Minister denied that the sudden fall in the currency’s value was linked to negotiations with the International Monetary Fund (IMF) for a financial bailout package.
Due to volatility in intra-day trading, inter-bank rates tend to fluctuate in treasuries of different banks depending on their positions and closing rates of the rupee to a dollar were confirmed at Rs135.75-136.25 from one source, while another claimed their closing rate was Rs136.5-137.50.
The major demands put forth by the IMF for the bailout include increasing general sales tax (GST) to 18 percent, further depreciation in the rupee and a tighter monetary policy.
Umar claimed that devaluation was necessary because of a number of reasons, including increased foreign loans, decreased foreign exchange reserves, low exports and artificial cap on the value of the dollar.
The finance minister said that rupee value cannot be controlled forever. “Even during the PML-N’s tenure, the value of rupee against dollar had reduced by Rs28,” he said, adding that the government artificially increased the value of rupee by purchasing dollars.
Since December last year, the currency has cumulatively depreciated by 29.5 per cent and had closed trading at Rs133.99 on Thursday in the inter-bank market.