Saturday, August 16, 2008

Pakistan rupee falls to new low

Pakistan trader
Investors are nervous in light of Pakistan's political uncertainty

Pakistan's currency has hit a record low against the dollar on speculation that President Pervez Musharraf might be on the verge of resigning.

The Pakistan rupee fell to 76.9 to the dollar on Friday, the fourth consecutive trading day it has hit an all-time low.

The currency has weakened on fears that the president faces impeachment.

Inflation in Pakistan is at its highest in 30 years, the trade deficit is widening and reserves have fallen.

The value of the rupee has dropped by 23% this year.

"It's panic and the central bank is not doing anything," one trader told the Reuters news agency.

Some investors say intervention by the central bank is needed to bolster the currency, but given its lack of capital this would be hard.

Mr Musharraf, who was involved in a coup that toppled former Prime Minister Nawaz Sharif in 1999, is being threatened with impeachment by Pakistan's new ruling alliance.

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