KARACHI: The dollar thrashed the rupee again on Wednesday as it gained one per cent in just one session to reach Rs106 in the inter-bank market.

In the open market the greenback was traded at Rs107 and the trading volume remained limited.

The market witnessed a panic-like situation as the demand remained high while the shortage was persistent.

The local currency lost 7.5 per cent since the PML-N government assumed power in the first week of June this year.

Currency dealers said the State Bank intervened in the second session to bring down the dollar at Rs105.88 but the importers were found extremely concerned over the situation.

Currency dealers and experts were in shock that the local currency was not putting any resistance against the dollar. But the government seems to have adopted calm and cool attitude.

Market experts believe the government was deliberately devaluing the local currency to meet the conditions of the IMF in the wake of $6.6bn deal. However, no official announcement has been made in this regard.

The experts said they were surprised by the government’s “surrender” to the rupee’s free fall.

“Indian government is facing huge current account deficit but it took immediate measures to save the rupee,” said Mohammad Sohail, CEO of Topline Securities. “In our case, actions are missing to stop this free fall of rupee on daily basis.”The currency dealers believe the government had no idea to tackle this situation which eroded the value of local currency to make it “a mere piece of valueless paper”.

The agreement with the IMF failed to strengthen the rupee, they said, adding that they had no idea when the local currency’s depreciation would stop.

Pakistan may continue to pay back the IMF debt with the help of another package by the Fund, but widening gap of trade deficit and falling reserves could further broaden the current account deficit which was not very high during the last fiscal.

The current account was in surplus of $46 million in July of the current fiscal but in the current situation the prospect of deficit is looming large.

With poor reserves of $5.1 billion and insignificant foreign investment, the current account deficit is bound to increase this year, said Atif Ahmed, a currency dealer and expert in the inter-bank market.

He said the country needs $1.3 billion a month on average for the import of petroleum products. It is enough to create imbalances on external account, reduce the country’s capability to import and hit the exchange rate hard for further devaluation of local rupee, he added.