KARACHI: Rupee gained against dollar in the currency market here the other day.
The US dollar shed 75 paisa against the rupee in the last two days to stay at Rs102 in the inter-bank market on Saturday.
The ups and downs in the dollar prices in the past two months — from a low of Rs101 to a high of Rs103 — have changed the shape of exchange rate. Some currency experts say that rapid fluctuations in the rupee-dollar parity is damaging for the confidence of the market.
The State Bank tried its best to keep the dollar within the range of Rs103, and it did succeed in doing so for more than 20 days. But the greenback then crossed Rs103.40 the previous week, before coming back to Rs102. “Apparently there is no solid reason for the dollar fall,” said Atif Ahmed, a currency dealer in the inter-bank market. “However, we see that its demand has come down during this week which forced it to shed some weight.”
Some currency experts said the market hopes for an inflow of over $1 billion through the International Monetary Fund (IMF) as two instalments are due next month. This is one reason for low dollar demand. “During the week which witnessed dollar sliding downward, there were also no big payments like oil payments,” said Atif. He said most big banks were out of the currency dealing, mainly because of State Bank’s influence. The big banks could make a bigger deal that could change the rupee-dollar parity. The market was also waiting for an inflow of over $800 million through 10 per cent sale of Oil and Gas Development Company (OGDCL).
The possible sale was scrapped by the government on Saturday but the expected deal played a role to depress the market sentiment towards the dollar. “The open market is dull. Both sellers and buyers are out of market which dropped the trading volume,” said Anwar Jamal, a currency dealer in the open market. The Forex Association of Pakistan reported dollar at Rs101.70 in the open market on Saturday.
Currency experts and dealers believe that downward trend of dollar was not sustainable for a longer period despite improvement in the foreign exchange reserves of the State Bank as well as commercial banks. SBP-held reserves rose to $8.618bn this week from $8.568m the last week. However, reserves of the scheduled banks increased substantially to $4.825bn from $4.631bn.