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Karachi: The Pakistani rupee rose two per cent yesterday from a day-earlier record closing low after the central bank said it was tightening regulations on transactions to support the rapidly depreciating currency.
The State Bank of Pakistan (SBP) issued a statement close to midnight on Tuesday saying that governor Shamshad Akhtar had "indicated that SBP is continuing to support the rupee to ensure exchange rate stability".
The main measure announced was a temporary suspension of forward booking of foreign currency for all imports, removing the simplest way for importers to hedge against a weakening rupee.
The rupee closed at 71.40/60 to the dollar, compared with Tuesday's weakest ever close of 72.85/90.
Decline
By the close of regular trade, the rupee had fallen 4.4 per cent since July 1, the start of Pakistan's fiscal year, and 13.8 per cent since the start of the year.
Annual inflation has accelerated to a three-decade high above 19 per cent and fiscal and current account deficits have widened to levels analysts say are unsustainable, due largely to a soaring oil import bill.
A new civilian-led coalition government, sworn in more than three months ago, has sought help from multilateral lenders and friendly governments to stave off economic threats as the country tries to cope with soaring import costs.
An Asian Development Bank credit of $810 million is expected to be approved in August and disbursed from September, an official told Reuters.
Any news that loans had been approved could provide some relief for the rupee, which is a managed currency, although Pakistan is one of the freest emerging markets in Asia.
Foreign currency reserves have dwindled to levels equivalent to less than three months worth of imports as the central bank sold dollars to help oil importers make payments. "The rupee's problem is a balance of payments problem more than anything else," said Hina Rabbani Khar, specialist assistant to the prime minister on finance and economic affairs.
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