ISLAMABAD, March 20 (Reuters) - The Pakistani rupee on Tuesday weakened sharply to about 115.5 per dollar from Monday’s close of 110.5, traders said, in what appeared to be another devaluation by the central bank.
The State Bank of Pakistan devalued the local currency by about 5 percent in December amid balance of payments pressures due to a widening current account deficit and dwindling foreign reserves. The market was broadly expecting another devaluation this year.
“We believe this is much needed as Pakistan’s external account has deteriorated as of late,” the Topline Securities brokerage said in a flash note to clients on Tuesday morning after the rupee weakened. A second trader confirmed the rupee’s sharp decline.
The central bank did not immediately respond to Reuters’ request for comment.
Reporting by Syed Raza Hassan and Drazen Jorgic; Writing by Drazen Jorgic; Editing by Sam Holmes