Pakistani rupee plunges to new record low

October 8th, 2008 - 9:19 pm ICT by IANS  

Karachi, Oct 8 (DPA) The Pakistani rupee Wednesday again fell to a record low against the US dollar to close at 80.30 amid a severe foreign exchange shortage and concerns of default on foreign debt repayments.The rupee closed at 80.10-80.30 in the open market against the dollar compared with 79.30-79.60 Tuesday despite the fact that the central State Bank of Pakistan intervened to improve liquidity.

Traders said the central bank’s injection of around $100 million failed to break the liquidity crunch as demand for the dollar continued to soar over rising concerns of default.

Foreign exchange reserves with the central bank have fallen by around 70 percent during the last nine months to $4.68 billion, barely enough to meet one month of imports.

Pakistan’s external debt servicing cost is $3 billion a year, including $500 million due in February, with imports of around $40 billion and exports of less than $30 billion.

Presently, the country is facing a current account deficit of around $14 billion along with an inflation rate of more than 25 percent, which doubled during the last 12 months.

Analysts say in the given circumstances the central bank is inching towards using private foreign currency accounts, something it did in 1998 after freezing bank accounts.

Both Moody’s and Standard & Poor’s, two leading credit rating agencies, have already downgraded Pakistan to negative and termed the country among the “riskiest” in the world.

Pakistan is planning to send a delegation to the United States next week to seek $10 billion in emergency assistance to pay its debt.

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