State Bank of Pakistan has devalued the national currency for the third time in six months
The State Bank of Pakistan on Monday devalued the rupee for a third time in just six months, amid speculation Islamabad is seeking another International Monetary Fund bailout.
The national currency dropped to Rs. 121.50 to the U.S. dollar on Monday before recovering slightly and closing at Rs. 119.84—a drop of 3.65 percent from its earlier position at Rs. 115.61.
A statement issued by the central bank cited dwindling foreign exchange reserves, which have shrunk to $10.04 billion as of June 1, 2018. “The market-based adjustment is reflective of the country’s external balance of payments position, which is under pressure due to a large trade deficit,” it said.
The latest move has relegated the rupee to the worst-performing currency in Asia this year, according to Bloomberg News.
Meanwhile, independent observers said they expected the rupee to fall further in the months to come, claiming it may hit Rs. 125 to the U.S. dollar by year’s end. Any attempt to seek support from the IMF might expedite this process, as the global body could require the central bank to weaken the currency further.
The latest slump of the national currency marks the third time it has been devalued since December 2017: It’s value against the U.S. dollar was reduced by 9.5 percent in December and then another 4.5 percent in March.