Rupee convalesce 1.8pc vs. dollar

Karachi: Banks supplied $5 million to the open market on Thursday causing immediate recovery of local currency which gained 1.8 per cent in just two days.



The sharp depreciation of dollar forced hoarders to come in the queue for selling dollars while buyers almost lost interest in the greenback.

The inter-bank market is under immense pressure as foreign exchange reserves of the country fell by over half a billion dollars within a week while the main loser was State Bank.



Both the inter-bank and State Bank lost their holdings by $141m and $417m, respectively, during Nov 21 to 29, reported State Bank on Thursday.

Pakistan paid $397m to the IMF in the last week of previous month while about $200m is due to be paid this month. The inflow of IMF’s second tranche of $547m is expected by mid of this month.



The federal finance minister recently claimed to bring the dollar down at Rs98, but market experts and currency dealers find it impossible owing to weak health of the State Bank reserves.

The SBP reported on Thursday that reserves of the State Bank fell to $3.046bn while holdings of scheduled banks also fell by $141m to $5.191bn.



“The dollar is available at Rs108.50 in the open market, but buyers disappeared which practically made us surplus,” said Malik Bostan, President, Exchange Companies Association of Pakistan. He said 90pc were sellers and only 10pc were buyers.

He said that on the instructions of the finance ministry and influence of State Bank, banks supplied $5m to the market which made a positive impact and the greenback lost 75 paisa in one go. He said the dollar lost Rs2 in two days.



“But I see no more appreciation of dollar since the inter-bank market has not yet shown signs of recovery,” he said, adding that now the dollar has same price in inter-bank and open markets.