KARACHI: Rupee registered slight gains against the US dollar in the interbank market on Wednesday, as the price of dollar decreased by Rs0.32 to Rs151.60.
The rupee reached a record low of Rs151.92 in the interbank market a day earlier to continue a slide that saw it lose more than 5 percent last week 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.