Islamabad, June 14: Neighbouring country Pakistan devalued its rupee for the third time in seven months on Monday. The Pakistani rupee slumped 3.8 per cent against the dollar before slightly recovering. The $300 billion-economy is showing signs of vulnerability. Dwindling foreign reserves and widening of current account deficit have given birth to speculation that Pakistan is likely to approach International Monetary Fund second time since 2013.
According to a report published in Pakistan daily, Dawn, The rupee closed at 119.85 per US dollar on Monday after opening at 115.63. It traded close to 121 per dollar on the same day. Before this, the rupee was devalued in December and March by five percent by Pakistan’s Central Bank.
According to the report, Pakistan’s economy is expected to expand by six percent this year. It is considered to be the fastest pace in more than a decade, but a widening of the current account deficit has brought new worries. Pakistan’s the current account deficit is now at $14 billion, which is around 5.30 percent of the gross domestic product. As per reports, Pakistan has only $10.3 billion foreign reserves as compared to $16.4 billion.
The neighbouring country is also in discussion with China for taking a loan of $1-2 billion to ease pressure on foreign currency reserves. According to Reuters, Pakistan has already taken a loan of almost five billion dollars from China. India has a strong economy compared to Pakistan. The general elections in Pakistan are scheduled to be held on July 25. this could be major concern fr the new government. If we talk about Indian rupee, currently, it stands at 67 per US dollar.