July 5, 2017 / 2:46 PM / 3 years ago

State Bank of Pakistan says 3 percent currency drop to address external pressures, help economy

A man is seen at a currency exchange office in Islamabad November 26, 2012. REUTERS/Faisal Mahmood/Files

ISLAMABAD (Reuters) - Pakistan’s central bank said on Wednesday a sudden 3 percent weakening of the rupee against the dollar would help the country’s external account and shore up economic growth.

Analysts speculated the State Bank of Pakistan (SBP) had effectively devalued the currency after the rupee slipped to 108.00 against the dollar by Wednesday afternoon, its weakest level in years, after closing at 104.896 on Tuesday.

In a statement, the central bank said the economy had shown strong fundamentals for a while but “the deficit in the external account has been rising for some time”.

“Accordingly, the exchange rate adjusted in the market and SBP is of the view that this depreciation in the exchange rate will address the emerging imbalance in the external account and strengthen the growth prospects of the country.”

Reporting by Drazen Jorgic; Editing by Catherine Evans

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