The Pakistani rupee slumped 3.8 per cent against the dollar on Monday before slightly recovering in what appeared to be the third currency devaluation in seven months by the central bank, traders said, amid a balance of payments crisis.

The rupee drop threatens to squeeze consumers, coming just days before the Eid holiday ending the Islamic fasting month of Ramadan and ahead of a general election set for July 25.

The apparent devaluation shows signs of vulnerability in Pakistan’s nearly $300 billion economy, as dwindling foreign reserves and a widening current account deficit trigger speculation about going back to the International Monetary Fund for loans for the second time since 2013.

One leading economist, Ashfaque Ahmad Khan, said the interim government that now holds the reins during the election campaign might itself be forced to go to the IMF.

Khan said the interim government needs to take policy decisions to curb imports and increase exports, but so far the caretaker government has not taken enough steps.

"If we rely exclusively on the rupee devaluation to address our balance of payment crises, this will have disastrous consequences," he said.

The outgoing government led by the Pakistan Muslim League-Nawaz (PML-N) has touted its stewardship of the economy as a reason to bring the party back to power, but foreign reserves are now at a low of two months' worth of imports.

The PML-N policy for years was to support keeping the rupee relatively stable in what was widely considered a managed float, but as the current account deficit widened and foreign reserves dropped to about half their peak, the policy shifted.

Since December, the rupee has fallen by about 14 per cent.

The rupee closed at 119.85 per U.S. dollar on Monday after opening at 115.63. Earlier in the day, it traded close to 121 per dollar, traders said.

"On Monday the central bank didn't intervene (to support the rupee) and allowed the market to determine the rupee value," Samiullah Tariq, director of research at Arif Habib Securities, told Reuters

"Pressure of a high current account deficit and dollar demand in the market also contributed to the rupee's fall."

A spokesman for the State Bank of Pakistan didn't respond to Reuters' request for comment on the talk that the bank had withdrawn support for the rupee, triggering another devaluation.

Withdrawal of support would have the effect of devaluing the currency as the SBP is the most influential player in the thinly traded local foreign exchange market and controls what is widely considered a managed float system.

In December and in March, the rupee was devalued, each time by about 5 per cent, by the central bank.

Pakistan's economy is expected to expand by close to 6 per cent this year, the fastest pace in more than a decade, but a widening of the current account deficit has brought new worries.

The current account deficit now stands at $14 billion, around 5.3 per cent of gross domestic product, an SBP official said.

The economic outlook has been hurt by the fast depletion of foreign currency reserves, which now stand at just over $10 billion.

Pakistan is currently in discussions with China for loans to ease pressure on its foreign currency reserves.

Over the weekend, the shortage of foreign currency widened the spread at which the rupee is traded in the open market and the interbank market to 4 rupees.

"Whatever has happened again today is the reflection of growing pressure on the balance of payments side,” Khan told Reuters.

"It also exposes the outgoing government claims that they strengthen the economy, that they have always been claiming that they are leaving the economy in good shape. That unfortunately isn’t the case."&nbsp

The Pakistani rupee slumped 3.8 per cent against the dollar on Monday

The Pakistani rupee slumped 3.8 per cent against the dollar on Monday before slightly recovering in what appeared to be the third currency devaluation in seven months by the central bank, traders said, amid a balance of payments crisis. The rupee drop threatens to squeeze consumers, coming just days before the Eid holiday ending the Islamic fasting month of Ramadan and ahead of a general election set for July 25. The apparent devaluation shows signs of vulnerability in Pakistan’s nearly $300 billion economy, as dwindling foreign reserves and a widening current account deficit trigger speculation about going back to the International Monetary Fund for loans for the second time since 2013. One leading economist, Ashfaque Ahmad Khan, said the interim government that now holds the reins during the election campaign might itself be forced to go to the IMF. Khan said the interim government needs to take policy decisions to curb imports and increase exports, but so far the caretaker government has not taken enough steps. "If we rely exclusively on the rupee devaluation to address our balance of payment crises, this will have disastrous consequences," he said. The outgoing government led by the Pakistan Muslim League-Nawaz (PML-N) has touted its stewardship of the economy as a reason to bring the party back to power, but foreign reserves are now at a low of two months' worth of imports. The PML-N policy for years was to support keeping the rupee relatively stable in what was widely considered a managed float, but as the current account deficit widened and foreign reserves dropped to about half their peak, the policy shifted. Since December, the rupee has fallen by about 14 per cent. The rupee closed at 119.85 per U.S. dollar on Monday after opening at 115.63. Earlier in the day, it traded close to 121 per dollar, traders said. "On Monday the central bank didn't intervene (to support the rupee) and allowed the market to determine the rupee value," Samiullah Tariq, director of research at Arif Habib Securities, told Reuters "Pressure of a high current account deficit and dollar demand in the market also contributed to the rupee's fall." A spokesman for the State Bank of Pakistan didn't respond to Reuters' request for comment on the talk that the bank had withdrawn support for the rupee, triggering another devaluation. Withdrawal of support would have the effect of devaluing the currency as the SBP is the most influential player in the thinly traded local foreign exchange market and controls what is widely considered a managed float system. In December and in March, the rupee was devalued, each time by about 5 per cent, by the central bank. Pakistan's economy is expected to expand by close to 6 per cent this year, the fastest pace in more than a decade, but a widening of the current account deficit has brought new worries. The current account deficit now stands at $14 billion, around 5.3 per cent of gross domestic product, an SBP official said. The economic outlook has been hurt by the fast depletion of foreign currency reserves, which now stand at just over $10 billion. Pakistan is currently in discussions with China for loans to ease pressure on its foreign currency reserves. Over the weekend, the shortage of foreign currency widened the spread at which the rupee is traded in the open market and the interbank market to 4 rupees. "Whatever has happened again today is the reflection of growing pressure on the balance of payments side,” Khan told Reuters. "It also exposes the outgoing government claims that they strengthen the economy, that they have always been claiming that they are leaving the economy in good shape. That unfortunately isn’t the case."

Pakistan's new rupee devaluation shows economic risk before election

Mumbai attack mastermind Hafiz Saeed has opened the first office of the Milli Muslim League (MML) in Lahore, days after the Pakistan government said the group would breed violence and extremism in politics while opposing a plea seeking its registration as a political party.

Saeed has confirmed that his organisation Jammat-ud-Dawah (JuD) would contest the 2018 general elections under the banner of the MML.

The MML is the offshoot of the banned Lashkar-e-Taiba (LeT) and JuD, according to the government.

The MML had challenged the Election Commission&#39;s order in October that had declined its registration as a political party.

Saeed inaugurated the office on Sunday in Lahore&#39;s National Assembly-120 constituency from where a JuD member had contested by-polls in September.

Despite refusal from the interior ministry to register the MML as a political party, Saeed pressed ahead with his plans to take the political plunge.

The Pakistan government has requested a court in Islamabad not to consider Saeed-backed MML&#39;s plea seeking its registration as a political party, saying the group would breed violence and extremism in politics.

The interior ministry has categorically made it clear that the state will not allow mainstreaming of jihad outfits.

Saeed&#39;s visit and opening of political office in Lahore indicate that he has ambitious plans to enter into politics.

During his visit on Mohni Road area adjacent to Data Sahib shrine, he listened to civic problems of people. People welcomed Saeed by showering rose petals on his vehicle in the area. The JuD headquarters in Chauburji also falls in NA-120.

The MML had secured the fourth position with 6,000 votes, double than that of Pakistan Peoples Party (PPP) and Jamaat- i-Islami combined.

Saeed, who carries a bounty of US $10 million announced by the US for his role in terror activities, walked free on November 24 after the Pakistan government decided against detaining him further in any other case. He was under detention since January this year.

The banned JuD is believed to be the front organisation for the LeT which carried out the 2008 Mumbai terror attack in which 166 people were killed.

Saeed has confirmed that his organisation Jammat-ud-Dawah (JuD) would contest the 2018 general elections under the banner of the Milli Muslim League (MML).

Mumbai attack mastermind Hafiz Saeed has opened the first office of the Milli Muslim League (MML) in Lahore, days after the Pakistan government said the group would breed violence and extremism in politics while opposing a plea seeking its registration as a political party. Saeed has confirmed that his organisation Jammat-ud-Dawah (JuD) would contest the 2018 general elections under the banner of the MML. The MML is the offshoot of the banned Lashkar-e-Taiba (LeT) and JuD, according to the government. The MML had challenged the Election Commission's order in October that had declined its registration as a political party. Saeed inaugurated the office on Sunday in Lahore's National Assembly-120 constituency from where a JuD member had contested by-polls in September. Despite refusal from the interior ministry to register the MML as a political party, Saeed pressed ahead with his plans to take the political plunge. The Pakistan government has requested a court in Islamabad not to consider Saeed-backed MML's plea seeking its registration as a political party, saying the group would breed violence and extremism in politics. The interior ministry has categorically made it clear that the state will not allow mainstreaming of jihad outfits. Saeed's visit and opening of political office in Lahore indicate that he has ambitious plans to enter into politics. During his visit on Mohni Road area adjacent to Data Sahib shrine, he listened to civic problems of people. People welcomed Saeed by showering rose petals on his vehicle in the area. The JuD headquarters in Chauburji also falls in NA-120. The MML had secured the fourth position with 6,000 votes, double than that of Pakistan Peoples Party (PPP) and Jamaat- i-Islami combined. Saeed, who carries a bounty of US $10 million announced by the US for his role in terror activities, walked free on November 24 after the Pakistan government decided against detaining him further in any other case. He was under detention since January this year. The banned JuD is believed to be the front organisation for the LeT which carried out the 2008 Mumbai terror attack in which 166 people were killed.

Hafiz Saeed opens party office in Lahore; eyes 2018 elections

pakistan-election

Pakistan Election, News on Pakistan Election, stories on Pakistan Election, articles on Pakistan Election, Pakistan Election stories at Wion, Pakistan Election news, Pakistan Election latest news

pakistan election

Pakistan's new rupee devaluation shows economic risk before election

Hafiz Saeed opens party office in Lahore; eyes 2018 elections