KARACHI: The rupee hit historic low of Rs94.30 against the US dollar in the inter-bank market on Wednesday.
Currency dealers said the dollar was booked at Rs98 for six month forward cover paving the way for the local currency to float freely, which is already visible.
“Within a couple of weeks the rupee lost Rs3.5 against the US dollar, which is one of the fastest depreciation of the local currency in the last two decades,” said Atif Ahmed, a currency dealer in the inter-bank market.
Dealers foresee further fall in the rupee value in coming two sessions as the demand for the dollar remains high amid low supply.
“If the State Bank does not come to the rescue the local currency will see another steep fall in coming days,” said Atif.
Contrary to its regular practice, the State Bank in recent days didn’t extend any support to the rupee to check sharp hike in dollar price.
This supported speculators’ claim that it was a deliberate devaluation and was done in the wake of the IMF earlier stance that the rupee was overvalued.
Other factors that depressed the market sentiments remained alive including the SBP Governor’s interview to the Wall Street Journal claiming that country would have to approach to IMF for loans as the country’s reserves may fall to $8 billion in first six months of the next fiscal year.
The SBP says it has no difficulty in paying IMF loans next year, but the currency dealers think the impact of no-foreign inflows for the last one year has already taken its tall.
In the open market the dollar was traded as high as Rs95.
Anwar Jamal, a currency dealer, said the market looked directionless having no knowledge what would be end result of this daily depreciation of the local currency.
Importers said the trade imbalance had eaten up the benefit of large remittances sent by overseas Pakistanis that could be in the range of $13 billion by June 30, 2012. “This imbalance causes short supply of dollar,” they added.
“Exports are not in good shape since the cost of doing business has gone up in Pakistan and highest in the region which means less chance for lowering of trade imbalance,” said Aamir Aziz, an exporter of textile products.
He said this big size depreciation would ultimately hit the exports as the imported raw materials would be costlier.
“The State Bank and other stakeholders much check this situation which could be disastrous for the entire economy,” said Aamir.