Pak rupee falling due to global currencies rout: SBP
The currency depreciation around the globe, particularly in the developing countries has accelerated since the start of devaluation of Chinese Yuan on 11th August 2015 which enhanced pressure in open and interbank market to depreciate Rupee level against US dollar.
The State Bank of Pakistan (SBP) said the impact on domestic economy and a downward movement of the exchange rate was witnessed after devaluation of currency was reported in regional countries.
As a result, on Monday, Pak Rupee depreciated against the US Dollar to close at Rs 104.50. This translates into a single day movement of the currency by 2.4 percent and a cumulative depreciation of 2.6pc percent since the beginning of this fiscal year.
Many of these countries have allowed their currencies to depreciate primarily to maintain their trade competitiveness against China. Pakistan is also part of the global economies and cannot remain immune to the developments around the globe.
It is important to realize that this positioning is driven by international currency movements and not due to any weakness in the domestic economy. The macroeconomic stability achieved through sustained improvements in economic fundamentals is very much intact and these recent developments do not pose any serious challenge to it. SBP said our external sector is robust and reserves are at historically high level. The SBP believes that Pak Rupee will remain stable, going for- ward, and may even strengthen depending on the relative movement of international currencies. Nevertheless, it is keenly watching the international economic developments and its impact on our domestic economy. It is also watching the rent seekers who tend to take advantage of such situations and cause damage to the economy by their speculative activities. The SBP stands ready to take any measure to ensure stability in the markets and will deal with such unscrupulous elements with strong measures. The State Bank of Pakistan is cognizant of the global developments related to markets and is keenly observing its impact on the domestic economy as well. Yesterday, financial markets across the globe witnessed turbulence and the panic was most visible in the stock markets.