Rupee Hits an All Time Low Against Dollar at Rs 128 [Updated]

The value of the US dollar hit an all-time high of Rs 128 in the interbank market on Monday. Yet another surprise depreciation of the exchange rate jolted markets today, the US dollar rose by Rs 6.45 in the interbank market, the forex dealers said. As the market opened, the rate of dollar soared to a high of Rs 126, then went to Rs 125.50 before rising once again to Rs 127.50 and then further spiking to Rs 128. In the open market, the US dollar rose by Rs 4 taking the rate to Rs 128.20. The large trade and current account deficits indicate that the demand for dollars has far exceeded supply, which has sharply driven down the exchange value of the rupee. The movement is based on foreign exchange demand-supply gap in the interbank market. The rupee is now Asia’s worst-performing currency this year. ALSO READ Pakistan Makes it Harder to Get Dollars as Reserves Fall On June 14, the rate of dollar closed on Rs 121.39. Dollar rose by Rs 1 during that day and also witnessed a sharp increase to Rs 122 at one point. Further on June 11, the US dollar closed at Rs 119.84, after reaching a record high of Rs121 earlier that day. Increasing imports and a widening current account deficit were cited as the possible reasons for the hike in the value of the foreign currency. During the visit to the Stock Exchange on Saturday, Caretaker Finance Minister hinted at the devaluation of the Rupee. She raised concern over the buildup of twin fiscal and external deficits that have complicated effective macroeconomic management. She insisted that the Interim Government is taking steps within its limited mandate to push for stability She said for the long-term stability and development of Pakistan, domestic resource mobilization and a strong export diversification drive will be important, which will help resolve country’s domestic and external vulnerabilities in most effective manner. Despite the continued growth in exports (13.3 percent in Jul-Apr FY18) and some uptick in remittances, growing imports have pushed the current account deficit to US$ 14.0 billion during the first ten months of FY18 which is 1.5 times the level of deficit realized during the same period last year, SBP said. Since December 2017, the rupee has depreciated by about 14 percent.