Pakistan News

Dollar rate rising in open market

Dollar rate rising in open market

KARACHI: Despite the government pressure to contain the dollar rise against the rupee, the greenback was trading at Rs107.70 in the open market, many currency dealers confirmed on Saturday.

The gap in the rates of open market and the inter-bank was alarmingly high at Rs2.70 per dollar, which may push the inter-bank to get rid of the forced price of Rs105.

Due to influence and pressure from the State Bank, the Exchange Companies Association of Pakistan (ECAP) and Forex Association of Pakistan under-report the greenback price on a daily basis, market watchers said.

According to the data provided by these associations, the greenback was traded as high as Rs106.40-50 on Saturday.

One of the leading currency dealers and an office bearer of ECAP confirmed that they provide data under pressure of the government. “We traded dollar at Rs107.60 on Saturday but the dollar has already crossed Rs107 much earlier,” said Anwar Jamal, a currency dealer in the open market.

Currency dealers said that the market was short of dollars.

“Demand is high while the supply has shrunk especially after the State Bank stopped supplying dollars in the open market,” said Zafar Paracha, Secretary General of ECAP.

About two months back the central bank started supplying the greenback to currency dealers and asked them to cut its rate by Rs2, but the US currency dropped by 50 to 70 paisas only and never came below Rs106.

Currency dealers said the dollar supply in small quantities from the central bank would not have any impact on the market.

Recently the State Bank extended the deadline for import of the greenback from Dubai in exchange of foreign currencies up to April, helping the open market to receive dollars directly in their accounts thus reducing the time.

The dollar price has been forcibly capped below Rs105, the dealers in the inter-bank market said, adding that the price could shoot up once the cap is removed.

“We believe the dollar has already gained higher price in the inter-bank but the price has been capped forcibly at below Rs105. It may show up its real value once the State Bank allows it to rise,” said Atif Ahmed, a currency dealer in the inter-bank market.

He said that the reserves of the scheduled banks fell below $5bn; though the overall reserves stood at $20.7bn.

Published in Dawn, January 24th, 2016

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