Rupee Slips Further to Rs150 In Open Market
On Friday, the rupee continued to drop to record lows, after the government took a decision to take a loan from IMF.
The rupee was 3.6 per cent on Thursday and closed 146.2 against US dollar in inter-market, dropped further on Friday, selling at Rs149.50 in the interbank market and Rs150 in the open market.
The fall is the result of the IMF's condition for a “market-based exchange rate mechanism, which will see limited intervention by the central bank now,” said Saad Hashmi, chief economist.
While the exact conditions of a final IMF deal are still unknown, which must still be approved by the Fund's board in Washington, said a “market-determined” exchange rate would help the financial sector.
Late on Thursday the SBP issued the statement saying it would help to correct market imbalances and that the sharp decline in the rupee "reflects foreign exchange demand and supply conditions."
While many analysts consider the rupee as being overvalued and say the SBP has wasted billions to defend it. A weaker currency will fuel inflation that is already more than 8 p.c.
The SBP, which is scheduled for its latest interest rate decision to be announced on Monday, said on Thursday that its foreign reserves dropped by $ 138 million in the week ending May 10 to $ 8.846 billion.