Pakistan devalues rupee for fifth time this year

Bloomberg

Pakistan devalued its currency for the fifth time this year as the nation negotiates a bail-out with the International Monetary Fund.
The rupee fell 3.8 percent to 139 per dollar at close from 133.9. The rupee has erased more than a fifth of its value to become the worst performer in Asia this year, according to a basket of 13 currencies compiled by Bloomberg. Officials at the central bank declined to comment.
“There was a need for an adjustment,” Prime Minister Imran Khan said in Islamabad. “Large deficits are impacting the currency as foreign payments are causing a shortage of dollars.”
The devaluation comes after talks with the IMF for a bailout to bridge a $12 billion financing gap stalled without an agreement after Khan’s government said it wasn’t ready to accept some of the lender’s conditions attached to the rescue package. Pakistan’s Finance Minister Asad Umar told Bloomberg the $305 billion economy can afford a two-month delay as it looks for alternates to the IMF after receiving $1 billion from Saudi Arabia.
Pakistan’s currency, which is a managed by the central bank, is one of the reasons negotiations hit an impasse with the IMF, Abid Qaiyum Suleri, an economic adviser to the government, said in an interview. The IMF has long advocated Pakistan to loosen its grip on the rupee.
“The currency is managed by the central bank and it can’t manage the rupee artificially for a long time,” Umar said at a briefing in Islamabad.

RATE DECISION
Pakistan’s latest economic crisis emerged after the current account and budget deficits widened and the foreign reserves dropped to a four and a half year low.
“The currency adjustment is in line with our expectations of the need for a weaker rupee in the context of ongoing IMF negotiations,” said Bilal Khan, a senior economist at Standard Chartered Plc.