ISLAMABAD: Pakistan’s rupee weakened sharply against the dollar on Tuesdayin what appeared to be a currency devaluation by the central bank, traderssaid, the second such intervention in the last three months.

The rupee plunged to about 115.5 per dollar in early trading from 110.5 atMonday’s close, traders said.

The State Bank of Pakistan devalued the local currency by about 5 percentin December amid balance of payments pressures due to a widening currentaccount deficit and dwindling foreign reserves. The market was broadlyexpecting another devaluation this year.

“Apparently the central bank withdrew support,” Fawad Khan, head ofresearch at BMA Capital, told Reuters.

Withdrawal of support would have the effect of devaluing the currency asthe State Bank of Pakistan (SBP) is the most influential player in thethinly-traded local foreign exchange market and controls what is widelyconsidered a managed float system.

The central bank did not immediately respond to Reuters’ request forcomment.

Pakistan’s economy has been growing at above 5 percent, the fastest pace ina decade, but a surge in imports has widened its current account deficitand prompted analysts to suggest the country may need an InternationalMonetary Fund (IMF) bailout in the coming 12 months. – Agencies