Pak Rupee has become a victim of immense devaluation against the dollar. In a market review, Bloomberg stated that Pak Rupee is competing for the title of the world’s biggest loser this month.
In May, Pak Rupee dropped by over 5% and crossed the 150 per dollar mark. The reason for this depreciation was because of government agreeing to another bailout by the International Monetary Fund. The bailout package suggested a market-determined exchange rate. The State Bank of Pakistan devalued the Pak currency 5 times in 2018.
Kaiser Bengali, an economist who has helped previous governments in multiple roles said, “This knee-jerk reaction of the market will continue.”
Adding, “Given our large deficit and high debt ratio, the rupee will continue to decline. The rupee will be 200 a dollar by year-end.”
Pakistan’s economy is suffering from ever-increasing debt, inflation, foreign reserves are falling. On Thursday, the Rupee closed at 148.2 per dollar. Last week, it reached a record low of 152.525. For the month of May, Pak Rupee has become one of the worst performing currency in the world following currencies from Zambia and Haiti.
Uzair Younus, South Asia director at Washington-based consultancy Albright Stonebridge Group LLC said, “The decision has been made to not allow the currency to remain overvalued for a long period of time. I expect the central bank to be measured in its approach and intervene only when it’s absolutely necessary. The pressure on the rupee will continue and the central bank will allow it to depreciate further in the coming weeks.”
Head of treasury at Pak Brunei Investment Co in Karachi Ahmed Ateeq said, “We are close to real effective exchange rate” that is a benchmark used by the IMF.