INSUBCONTINENT EXCLUSIVE:
Pakistani rupee tumbles, SBP cites "market forcesISLAMABAD: The Pakistani rupee dropped sharply in early
trade on Monday in what appeared to be another devaluation by the central bank, two market analysts said, the fourth such intervention since
early December.The currency was trading at around 125/126 per dollar at 10.30 am local time (0530 GMT) after closing at 121.5 per dollar on
Friday."It looks like the central bank was prepared to do this and this rate is here to stay for now," said one of the analysts, who spoke
on condition of anonymity."Market forces are driving the exchange rate," Abid Qamar, the central bank spokesman, told Reuters via text
message.The State Bank of Pakistan (SBP) usually makes an announcement about devaluations a few hours after they take place.Pakistan's
economic fundamentals have deteriorated ahead of the country's July 25 general election, with most financial analysts expecting the next
government will need to seek a post-election bailout from the International Monetary Fund (IMF).Pakistan's current account balance has been
widening sharply, while foreign currency reserves have plummeted over the past few year.The central bank last devalued the rupee by about 4
percent in June, after weakening the currency by about 10 percent during interventions in March and December.Traders say the SBP devalues
the currency by withdrawing support in the rupee market
This has the effect of weakening 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.
