Pakistan rupee sinks to record low against dollar

Pakistan's rupee sank to its lowest level against the dollar on Thursday, as the central bank denied that it would have to return to the International Monetary Fund (IMF) for assistance. Amid panic in Pakistan's fragile forex market, the rupee slid 0.9 percent to 93.8350 per dollar, a record low, according to Malik Bostan, president of the Forex Dealers' Association. In an interview published in The Wall Street Journal on Tuesday, bank governor Yaseen Anwar was quoted as saying the government's failure to control the deficit could make it difficult to meet the more than $4 billion in IMF loans due in the fiscal year starting July 1. "This statement created havoc in the market, causing a drop of 1.3 percent in the rupee's value against the dollar in two days," Mohammad Sohail, of Topline Research, told AFP. The State Bank of Pakistan moved to play down any concerns. "The decline in our projected reserves will be partially offset by an increase in remittances, which will exceed $13 billion this fiscal year," Anwar said. "Additional foreign direct investment (is) in the pipeline that includes US company investments in the power sector." But he conceded that the fiscal deficit and the lack of external financing will continue to challenge Pakistan, especially the central bank. "Yet, let me assure you that Pakistan will not stumble into a situation that requires emergency external assistance," he stressed. Analysts said another factor that had devalued the rupee by 4.1 percent this year was the uncertainty over Pakistan's now six-month blockade on NATO supplies to Afghanistan. "The rupee is in greater pressure as well because of the delay in the settlement of Pakistan's dispute with NATO, which has made uncertain the payment of billions of dollars of the Coalition Support Fund to Pakistan," Sohail said. Pakistan sealed its Afghan border to NATO supplies last November after US air strikes killed 24 Pakistani soldiers. It has conditioned its reopening on an American apology and an end to US drone strikes on Islamist militants. Separately, the central bank on Thursday urged all exchange companies to take steps to combat money laundering and terrorist financing. "Exchange companies should monitor all complex, unusually large transactions and all unusual patterns of transactions which have no apparent economic or visible lawful purpose," it said in a statement.