Pakistani rupee falls after market maker group removes currency cap

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KARACHI, Pakistan : The Pakistani rupee fell by 1.2 per cent on Wednesday after foreign exchange companies removed a cap on the currency, saying it was creating "artificial" distortions in the market as the South Asian country struggles to escape a deepening economic crisis.

Pakistan is battling to meet its external financing obligations in the face of rapidly dwindling foreign exchange reserves that are barely enough to cover a month of imports. It is also beset by decades-high inflation which policymakers are trying to curb with massive interest rate hikes.

The rupee was bid at 240.60 to the U.S. dollar and offered at 243 in early trade, the Exchange Companies Association of Pakistan said in a statement, compared with a range of 237.75/240 at the close on Tuesday.