LAHORE: State Bank of Pakistan governor Tariq Bajwa on Sunday expressed hope that the slide in the rupee will be stemmed once money flows into the economy. Speaking to reporters in Lahore earlier today, Bajwa said the dollar rate is dependent on two factors: macroeconomic fundamentals and market sentiments.
“As money [flows into] the economy [through cash injected], Insha’Allah you will see, the market sentiment will improve… the pressure will dissipate from the rupee,” he said. The central bank governor said the Supreme Court’s decision to end the mobile phone tax affected the country’s tax net. Bajwa added that Finance Minister Asad Umar knew about the spike in the dollar and had already clarified in a statement earlier that the rupee devaluation had been discussed with him.
On November 30th, the rupee hit an all-time record low of Rs144 against the US dollar, plunging almost five percent after what appeared to be a sixth devaluation by the State Bank in the past year as the country struggles with an acute balance of payment crisis. The surge in dollar came owing to the widening current account deficit and the International Monetary Fund’s suggestion to the government to realign the rupee with market fundamentals to access funds.
The rupee has depreciated by 36 percent against the dollar over the past 12 months. It has fallen by Rs19.5 against the dollar since the Pakistan Tehreek-e-Insaf took the reins of the country following the general election in July this year.