KARACHI: The Rupee-Dollar exchange rate in the interbank market closed at Rs128.0 per US dollar against the closing level of Rs121.55 per US dollar of the previous day. This movement in the exchange rates reflects the demand-supply gap of the foreign exchange in the interbank market.
As noted in the recent monetary policy statement, the financial year 2018 ended with a real Gross Domestic Product (GDP) growth at a thirteen-year high level. However, this high growth has been accompanied with a notable deterioration in the country’s balance of payments. Despite a double-digit growth in exports (YoY 13.2 per cent in Jul-May FY18) and a moderate increase in remittances, strong demand for imports (YoY growth of 16.4 per cent in Jul-May FY18) has pushed the country’s current account deficit to the levels not sustainable beyond the short run.
The State Bank of Pakistan (SBP) is of the view that this adjustment in the exchange rate along with the increased policy rate and other administrative measures, would help contain domestic demand in general, and reduce the imbalances in the country’s external accounts in particular.
SBP will continue to closely monitor the evolving fundamentals of the economy and stand ready to ensure stability in the financial markets.