The rupee-US dollar exchange rate closed at Rs107 to the
dollar after deteriorating unexpectedly in the interbank market on
Friday.
The day's high was recorded at Rs109.50/USD, while Rs105.55 remained the day's low.
The dollar had closed at Rs105.50 in the interbank market on Thursday.
State Bank of Pakistan (SBP) spokesman Abid Qamar told DawnNews during trading that they were monitoring the situation. He said the bank will intervene if need be.
In a post market close press release, the central bank said:
"SBP
is of the view that this market-driven adjustment in the exchange rate
will contain the imbalance in the external account and sustain higher
growth trajectory. The exchange rate will continue to reflect the demand
and supply conditions; and SBP stands ready to intervene, in case
speculative and/or momentary pressures emerge, for smooth functioning of
the foreign exchange markets."
The development came a day after a United Nations report warned
that the government’s policy of keeping the exchange rate stable by
intervening in the foreign exchange market may become unsustainable if
the US dollar appreciates against most major currencies in global
markets.
The stable exchange rate may be encouraging for
some investors and traders, but the report warned that it is draining
precious foreign exchange reserves.
“In these
circumstances, if the US dollar appreciates against most major
currencies in the global markets, the policy approach currently being
pursued by Pakistan could become unsustainable,” it warned, raising the
spectre of a forced devaluation at some point down the road.