Pakistan's Rupee Rebounds From Biggest Tumble in Nine YearsBy
Finance Minister Ishaq Dar to meet bank heads to discuss drop
Foreign exchange reserves down 10% to $16.4b in 2017: Insight
Pakistan’s rupee recovered from its biggest plunge in nine years ahead of a government meeting with bank presidents to discuss the currency’s slump.
The rupee strengthened 0.9 percent to 107.1 per dollar at 10:17 a.m. local time, recovering from a 3.1 percent slide against the dollar on Wednesday. While analysts said the nation’s central bank had devalued the currency to its lowest level since December 2013 to boost the economy, Finance Minister Ishaq Dar called the weakening “artificial.”
The International Monetary Fund last year pointed out that the currency -- which operates under a managed float regime -- was overvalued by as much as 20 percent and hurting its exports. The nation’s foreign exchange reserves have declined 10 percent this year to $16.4 billion, covering a little over three months of imports, according to Insight Securities Pvt.
“The market is confused as to what the quantum of devaluation would be,” Zubair Ghulam Hussain, chief executive officer at Insight, said by email. “With multilateral agencies calling the rupee to be 5-20 percent overvalued, a 3 percent devaluation can only be a precursor.”
Dar is due to meet bank executives today, according to a statement by the ministry issued Wednesday. In an interview last month, Commerce Minister Khurram Dastgir Khan said he was trying to persuade Dar to adjust the rupee’s value after the weakening of currencies by regional players including China gave them an edge over Pakistan.
The IMF last month said economic stability reached under a three-year $6.6 billion loan program that ended last year has begun to erode. Pakistan’s current account gap has more than doubled to $8.9 billion in 11 months ended May compared with $3.2 billion in the same period last year.
The "State Bank of Pakistan will continue to closely monitor the developments in the foreign exchange markets and stands ready to ensure stability in the financial markets,” the central bank said Wednesday.