KARACHI: The rupee plunged to a record low of Rs119.35 in the kerb marketagainst the US dollar on Friday, as dwindling foreign exchange reservescontinue to impact the local currency.
It also touched a new intra-day low of Rs119.80, according to DollarEastExchange Company’s webpage.
The rupee on Thursday had ended the day at Rs119.10 to the US dollar in thekerb market but it remained stable in the inter-bank market at Rs115.61,according to data from the central bank.
Experts believe the dwindling forex reserves of State Bank of Pakistan(SBP), which reached a four-year low of $10.03 billion as, on May 25th, lowinflows due to stagnant exports and remittances would force the nextelected government to devalue the rupee further to enhance exports andbring in a higher amount of remittances.
Many expecting an imminent devaluation of the rupee have started holdingonto their dollars foreseeing a better return later.
This comes on the heels of the State Bank of Pakistan’s decision last weekto introduce identification requirements for all foreign currency buy andsell transactions equivalent to $500 or above on exchange companies anddirected them to retain the copies of identification documents to complywith anti-money laundering rules which had contributed to slow down in theflow of dollars to the dealers.
Malik Bostan, President Pakistan Forex Association (PFA) highlightedcontinuing pressure on the rupee was due to increased demand of foreigncurrencies from Umrah pilgrims in Ramazan.
He added over two million Pakistani’s have been given visas to performUmrah since December 2017 and many people go during the holy month ofRamazan.
Mr Bostan further explained besides Umrah and Hajj demand, the Saudi riyaland UAE dirham used to be in surplus and which were used to import dollarsfrom Dubai in exchange.
He added, “such foreign currencies are not in surplus now which hasimpacted the flow of dollars to the open market as well.”
Previously, credit rating agency Moody’s projected the rupee could plungeby 7.75 percent and touch Rs125 to the dollar by June 2019.