Rupee dips deeper against dollar

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KARACHI, July 16: US dollar broke barriers to crush the local currency as it was traded as high as Rs102.60 in the open market and Rs100.34 in inter-bank on Tuesday.


Uncertainty over foreign exchange reserves deepened in the absence of a clear schedule of dollar inflow.


Falling reserves are creating a panic-like situation in the market.


Market players told Dawn that commercial banks have declined to provide dollars to the exchange companies, and said they would know on Wednesday what stance they should adopt towards the demand for dollar from money changers.


The exchange companies bring dollars from Dubai by selling other currencies.


The dollar is transferred to Pakistan through banks which banks provide dollars to exchange companies on their demand.


“Under the arrangement, banks provided 50 per cent of dollars deposited overseas after four days, and withdrawal of the left-over amount depends on a variety of factors. However, on Tuesday they declined to honour our requests for dollar withdrawal and promised that they would inform us on Wednesday regarding the date when we can get our deposited dollars,” said Malik Bostan, President, Exchange Companies Association of Pakistan.


He said the State Bank should immediately take notice of the situation which is causing panic in the currency market.


He said banks on Tuesday did not give us any timeframe when dollar accounts can be accessed.


Currency dealers in the inter-bank market did not receive any support from the Central Bank to stop free fall of the local currency.


Market experts said even news about agreement with the IMF for over $5 billion loans provided no respite to the rupee. They said IMF invited Pakistan in September while the reserves of the country are falling on a day-to-day basis.


Market also believes that the current wave of devaluation is a pre-condition for a successful agreement with the IMF.


The inter-bank market received higher demand which pushed the dollar prices up to close in the range of Rs100.29-34.


Anwar Jamal, a currency dealer in the open market, said trading activities were higher than the normal days; both buying and selling were high. The dollar was traded at Rs102.30 and Rs102.60 in the open market.


“Since Ramazan is Umrah season, travellers are buying dollars from the open market which is one of the main reasons for higher demand and higher prices,” said Jamal.Currency experts expressed surprise over sudden appreciation of dollar even in Ramazan since overseas Pakistanis traditionally send Zakar and other funds for charity.


They said despite higher remittances, dollar is short in the market since supply from banks is not proper.

Courtesy:   Dawn

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