Pak rupee fall­ing due to global cur­ren­cies rout: SBP

The Pak Banker - - FRONT PAGE -

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.

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