Pakistani rupee registers slight gains against US dollar

KARACHI: Pakistan’s rupee registered slight gains against the US dollar in the open market on Wednesday.

The dollar decreased by Rs1 in the open market and was being traded at Rs153. In the interbank market, while registering an initial decrease of Rs0.32 earlier in the day, the dollar gained Rs0.03 and closed at Rs151.95.

The rupee has been recording record lows against the US dollar in the wake of a $6 billion loan accord with the International Monetary Fund.

The IMF accord, which must still be approved, foresees a “market-determined” rate for the rupee. At present, the currency - which many analysts consider overvalued - is managed by the central bank in a de facto controlled float.

The State Bank of Pakistan, which lifted interest rates by 150 basis points on Monday to 12.25%, said it was watching the foreign exchange market closely and would act in the case of “unwarranted” volatility.

It said the recent slide “reflects the continuing resolution of accumulated imbalances of the past and some role of supply and demand factors”.

The sliding rupee has caused alarm in Pakistan, which is already facing inflation likely to average over 7% for the year and surging costs for fuel and power, which are both heavily influenced by the dollar exchange rate.