Weakening rupee raises fears about economy

As the rupee continues to weaken faster than market expectations, doubts and fears are mounting over the country’s economic health, particularly its ability to pay the import bill for essential items in the coming weeks. The exchange rate has been primarily hit hard by a steep decline in the central bank’s foreign exchange reserves, which have shrunk to a near nine-year low of $4.34 billion. The stock market, best by political uncertainty and worrying economic indicators, is also on the decline and fell 3.5 per cent on Tuesday to close at 38,342.21 points. Currency experts said the rupee has been falling “despite being managed by the State Bank of Pakistan (SBP)”. On Tuesday, it closed at Rs228.66 against the dollar. The local currency last rose against the dollar on Dec 1, when it increased 0.12pc to close at 223.69. The decline has gained momentum is recent days, with the rupee going down by 1.25 during the last six sessions.