Despite crackdown, rupee touches new low.

KARACHI -- Despite government's claim of having launched a crackdown on foreign currency smugglers, Pakistani currency hit a new historic low at Rs303.05 against the US dollar in the inter-bank market on Tuesday, maintaining its record-breaking downward spree for the sixth consecutive working day.

The State Bank of Pakistan (SBP) reported that the domestic currency dropped 0.35%, or Rs1.05, to a new all-time low at Rs303.05 against the greenback.

With the fresh fall, the cumulative loss in the currency's value reached 4.80%, or Rs14.56, in the first 15 days of the current caretaker government, continuing the fresh round of depreciation.

In the open market too, the currency decreased almost 1%, or Rs3, to a new record low at Rs318/$, according to the Exchange Companies Association of Pakistan.

Accordingly, the difference between exchange rates in the two markets further widened to around 5% (or Rs15), remaining well above the IMF's recommended level of 1.25% (slightly over Rs4).

Market talk suggests that the rupee is losing value every day owing to the smuggling of US dollars from Pakistan to neighbouring countries.

The illicit Hawala-Hundi operators are paying a significantly higher price to the sellers of US dollars and demanding even higher price for dollar purchase by importers for settling payments abroad. This is weighing on the rupee in both open and inter-bank markets.

To arrest the currency's free fall, the authorities concerned have launched a crackdown on currency smugglers and have taken action against the exchange companies found violating trading rules.

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