LAHORE, KARACHI - Despite high foreign exchange reserves and narrowing current account deficit, the rupee is constantly losing its value, sinking to a fresh two-year low of Rs105.80 against the greenback in the inter-bank market, falling 56 paisa from its previous closing.

In the open market, the rupee was down by 30 paisa from Tuesday’s closing and traded at Rs105.60 against the US dollar, depreciating by 3.5 percent since the beginning of the current fiscal year.

The US dollar also hit a 2015 high of Rs106.10 during the day’s trading on Wednesday, currency dealers claimed, adding the depreciation of the rupee was behind the rate hike, while the greenback also edged to a 2-month high against a basket of other major currencies ahead of the US Federal Reserve expected announcement of hike in interest rate.

Majority of the dealers had consensus on the point that declining of local currency against the US dollar was actually a deliberate attempt by the government to appease the exporters as well as the IMF. They said the government is presently in talks with the International Monetary Fund in Dubai, which has pressurized it to devalue rupee.

According to money market experts, the local currency has started going down due to strong demand. They said that exporters were also demanding to devalue the rupee owing to high cost of production in the country, besides the directives of the International Monetary Fund (IMF) is also being implemented strictly which wants the local currency to further drop. They said the rupee may touch 106-level versus the dollar in the short run, as no difference was seen in the rupee-dollar parity rates in both the open and inter-bank markets on Tuesday in the process of forward buying of greenback.

Due to the rise in the value of the dollar by Rs1.40 in the last two days, Pakistan’s external debt is likely to see an increase of Rs84 billion, financial analysts said.

Noted economist Dr. Salman Shah said that Pakistani Rupee was left alone to depreciate. He said that the PML-N came into the power with claim of reviving economy but it was doing nothing except getting loan from International Monitory Fund or launching Euro bonds at high markup just to settle an installment of previous loan, putting pressure on Rupee further. The government not only doing nothing to control the devaluation of Pakistani currency but also trying to fool public by giving the wrong figures about the damage devaluation of Pakistani currency did in terms of hike in foreign debt in its era.

He said that the sudden appreciation of the US currency also created a rush of buyers to cover their imports. The latest rise in dollar’s value increased rupee depreciation to over 3.5 per cent since July. Experts said that chances are very little that the dollar would slide back. Some experts were of the view that the earlier depreciation of the rupee was deliberate support for exporters, as falling exports had forced the government to facilitate the exporters but this new slide of rupee was not influenced by the government or central bank.

“If we take account the actual depreciation in major currencies, the fair value of the rupee has shifted to Rs108 against US Dollar.”

The recent climb of the dollar against the rupee has been attributed to a strong demand of the greenback from importers and its outflows from the country.

Citing number of reasons for growing demands of US dollar, Chairman AKD Group Aqeel Karim Dhedhi said that ill-conceived government policies have invited the people to convert rupee into dollars and to invest in Pakistan Bonds which has interest rate of 8.25 percent.

He said that devaluation of rupee will have a snowball affect on the economy and also resulted in price-hike and increase in country’s debt.

He said credit must go to overseas Pakistanis who sent remittances, which help reduce current account deficit otherwise the blunder committed by government’s financial wizards push the country into debt trap. Currency dealers are of the view that the growing demand of greenback is due to oil-related payments.

There were a few import payments in the market and banks were already short of them, and as the rupee crossed the 104.50 level it triggered ‘stop’, surging the rupee past the 105 figure,” they maintained. It’s no coincidence that it happened on a day when the Finance Minister initiated meeting with the IMF (International Monetary Fund) and also when economic managers are assessing the damage from the deadly earthquake,” analysts added.