- Importers boosting greenback purchases to pay bills: BMA
- Foreign-exchange reserves exceeded $20 billion this month
Pakistan’s rupee slumped to the lowest level since February 2014 on speculation importers boosted dollar purchases to clear month-end bills and investor sentiment weakened following an earthquake on Monday, according to two foreign-exchange traders.
“The rupee came under pressure from rising dollar demand,” said Mirza Kamran Baig, head of treasury at BMA Capital Management Ltd. in Karachi, adding that the local currency weakened to 105.5 per dollar on Tuesday. “The retreat will help maintain Pakistan’s export competitiveness.”
Overseas shipments from Pakistan fell for a fifth straight month in September. The currency has been pressured in the past few weeks also as China’s shock Aug. 11 yuan devaluation prompted the State Bank of Pakistan to allow a decline in the rupee. Foreign-exchange reserves exceeded $20 billion for the first time on Oct. 1.
Kamran Zia, head of foreign exchange at Silkbank Ltd. in Karachi, also quoted the same rupee level as BMA’s Baig. Pakistan’s benchmark Karachi Stock Exchange 100 Index fell for a second day to close at its lowest level since Oct. 9, data compiled by Bloomberg show. Afghanistan’s strongest quake in more than six decades shook buildings across the South Asian region and caused houses to collapse in Pakistan, where more than 200 people were killed, according to news reports.
“The rupee weakness could also be because of the earthquake as incidents such as natural disasters have traditionally caused the dollar to spike,” he said.