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Pakistani rupee plunges to record low; foreign reserves dwindle

ISLAMABAD - Pakistan's roller-coaster currency hit a historic low of 84.5 against the dollar on Friday, hours after the central bank announced that the country's reserves fell by 6.9 per cent last week, dealers said.

The Pakistan rupee made a slight recovery later and closed at 83.2 to the dollar against the overnight close of 82.

The currency weakened on the report by the State Bank of Pakistan (SBP) that foreign exchange declined by 570 million dollars in the week that ended on October 11.

According to the SBP, at the start of current week the reserves stood at 7.75 billion dollars of which it holds 4.43 billion dollars.

"Depleting reserves and ever-growing pressure due to import payments are primarily responsible for the sharp slide," a foreign exchange dealer said.

He quoted the rupee at 85.5-86.0 to the dollar in the open market.

Some dealers in Peshawar, the capital of the North West Frontier Province near the Afghan border, even offered 87 rupees to a dollar on Thursday after a severe shortage of the greenbacks when commercial banks refused to make payments in the US currency.

The rupee has weakened by more than 27 per cent against the dollar during the current year.