Rupee sliding depleting foreign exchange reserves

Islamabad: The government launched its charm offensive with banking industry to control ever sliding rupee and depleting foreign exchange reserves.

Finance Minister Ishaq Dar had a face-to-face session with heads of all the public and private banks operating in Pakistan as part of his fire-fighting efforts, and solicited their personal support over a transitory period to check continuous devaluation of the rupee in inter-bank market as he builds up foreign exchange reserves position.

The bankers’ positive response caused a 32-paisa decline in dollar price as the rupee closed at Rs107.78 to a dollar in the interbank market after the meeting was over.

The minister told the bankers that they have to work with the government at a difficult situation to stabilise forex market and discourage speculators who were taking undue advantage of the situation.

Earlier, Mr Dar in a media comment had blamed a group of bankers for cartelizing the exchange rate and had threatened to deal with them accordingly to bring the exchange rate below Rs100 to a dollar.

He told the banking chiefs that the government has redoubled its efforts to increase foreign exchange reserves.

He said the government “expects a payment from Etisalat of $800 million against PTCL proceeds, $800m from the United States against outstanding payments due on account of Coalition Support Fund and over $1.2 billion against auction of spectrum licence during the current fiscal year”. Besides, $137m are expected from Islamic Development Bank to flow in on Wednesday, an official statement said. Governor State Bank Yaseen Anwar informed the meeting that in the last two days exporters had liquidated export proceeds totalling $70m while the government was receiving $30m per day on account of remittances which had improved the foreign exchange position.

Mr Dar hoped the situation of inflows will further improve and those who speculate on the rupee would only end up as losers. He said the government had a clear road map to build foreign exchange reserves up to $20bn in the next three years.