US dollar closes at Rs119.84 in interbank market

KARACHI: The US dollar closed on Monday at Rs119.84, after reaching a record high of Rs121 earlier in the day, the State Bank of Pakistan said.

The movement is based on foreign exchange demand-supply gap in the interbank market, the central bank said.

Increasing imports and a widening current account deficit were cited as the possible reasons for the hike in value of the foreign currency. 

Despite the continued growth in exports (13.3 percent in Jul-Apr FY18) and some uptick in remittances, growing imports have pushed the current account deficit to US$ 14.0 billion during the first ten months of FY18, which is 1.5 times the level of deficit realised during the same period last year, SBP said.

New rupee devaluation shows economic risk before election

The rupee slumped 3.8 percent against the dollar on Monday before slightly recovering in what appeared to be the third currency devaluation in seven months

The bank said this market-driven adjustment in the exchange rate along with other recent policy measures are expected to contain the imbalances in the external account, thereby containing aggregate demand and also facilitating the prospects for generating non-debt creating inflows.

In March, the US dollar shot up by Rs4.93 in the inter-bank market to hit a high of Rs115.5 before coming down to Rs115 at the close of business.

Since December, the rupee has fallen by about 14 percent.