Pak. rupee hits record low

By Our Special Correspondent

ISLAMABAD, AUG. 20. Pakistani rupee plunged to a record low on Saturday against the U.S. dollar as the Rupee shed 55 paise in a single session.

The rupee has witnessed a steady decline since the State Bank of Pakistan, in the third week of July, allowed the rupee to float freely against the dollars and directed the banks to set up own rates for buying and selling inter-bank rates. Since then the rupee has lost over 3 per cent of its value.

Reports from Karachi on Saturday said the U.S. dollar rose to Rs. 57.15 and Rs. 57.25 for spot buying and selling in the open market against the previous close of Rs. 55.60/Rs.55.70. The dollar was quoted at Rs. 54.30/54.40 in the inter-bank market.

Currency dealers had predicted a sharp fall in the value of the rupee on account of the free float decision, but the managers of the State Bank had termed any worries on this count as unwarranted.

A senior manager of the SBP even maintained that the State Bank would review the decision on free float if the rupee continued to register the downfall and did not stabilise after a few days.

The continuing decline in the value of rupee has had an interesting spin-off. There were reports that some people to protect the value of their money, were converting the local currency into dollars.

``Although the deposits in the New Foreign Currency Accounts (NFAC) were just $ 106 million in the last eight weeks, the trend indicates that the people are speculating that the rupee may decline further. The total amount of NFACs has grown to over $ 1.03 billion, since the SBP allowed opening of NFCAs in June 1998. That was shortly after the Government froze $ 11 billion in private Foreign Currency Accounts in the wake of nuclear tests'', the English daily, The Nation, reported.

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Section  : International
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