Pakistan Central Bank Chief Says He Doesn't See Need to Devalue
Low inflation and solid growth mean there’s no pressing need to devalue the currency in the near term.
(Bloomberg) -- Low inflation and solid growth mean there’s no pressing need to devalue the currency in the near term, State Bank of Pakistan Governor Tariq Bajwa said in an interview.
Pakistan has allowed the rupee to weaken twice in recent months as it attempts to mend its deteriorating finances before elections due in July. Bajwa said another near-term move to devalue is unlikely.
"Not at the moment, we just did one in March so we are waiting to see its impact. If there is a requirement we will do it but I don’t see anything imminent," he said, echoing comments by the nation’s finance minister.
The economy is facing headwinds with foreign-exchange reserves dropping at the fastest pace in Asia in the past year and current-account deficit rising by about 50 percent in the current fiscal year.
The central bank unexpectedly moved interest rates up 25 basis points in January, the first increase in more than four years, before surprising again by leaving it unchanged two months later.
Bajwa said overall growth is on track and that robust food supplies is helping to keep prices down.
"Inflation continues to be low, which is very good news," he said. "But the pressure we see is on the current account so we are doing a balancing act."
Some analysts have pointed to Pakistan’s growing debt, shrinking reserves and deteriorating external position as proof that Islamabad will need to turn to the IMF or China, which is financing about $60 billion of infrastructure investments across the country, for financial support.
"We have a very strong growth story," Bajwa said.
To contact the reporters on this story: Enda Curran in Hong Kong at ecurran8@bloomberg.net, Faseeh Mangi in Karachi at fmangi@bloomberg.net.
To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Brendan Murray, Malcolm Scott
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