KARACHI, Nov 1: The State Bank made heavy buying of US dollars from the inter-bank market last month to keep the greenback a bit stable for exporters.

Senior central bankers confirm dollar buying but none of them is ready to disclose the exact volume. Estimates vary. “The State Bank bought no less than $350 million,” said one senior official who refused to be identified. He said $300 million were bought in ready and the rest in forward. Another official said total buying could be even higher.

“We went for dollar buying to halt further fall in its value,” said the SBP official.

“In doing that we provided some comfort to exporters and also built up our reserves.”

The dollar had started falling dramatically both in the inter- bank as well as in open currency market after the September 11 attacks on the United States.

The fall continued through October particularly after the US launched a retaliatory attack on Afghanistan in the first week.

Between September 11 and October 31 the dollar depreciated by more than 5 per cent in the inter-bank market making it quite difficult for the exporters to maintain their competitiveness.

“Had we not purchased a few hundred million dollars from banks the greenback would have gone further down putting more pressure on the exporters,” said an SBP official who declined to be named.

Sources in SBP say the central bank may buy more dollars from banks if it feels that the exporters must be provided more relief in exchange rates. But they say that would depend on whether the inflow of foreign exchange in the inter-bank market can keep its current pace. Central bankers say dollars are flowing into inter -bank market from several different sources including sale of overdue export proceeds.

But opinions are divided on whether the inflows would keep up the current pace. “Not only the inflow is higher. The demand is also sluggish amidst the prevailing uncertainty in the region,” said one senior SBP official. “The current exchange rate is not sustainable,” he remarked meaning that the rupee could lose some of its strength in future.

“But that again would depend on how much external financing we could get in near future.”

Officials say dollar buying from banks last month did not stop SBP’s routine outright purchases from the kerb market. “We did buy dollars from the kerb market as well but in smaller volumes,” said one senior official.

The official would not quantify kerb purchases made last month but sources close to SBP said the State Bank bought $50 million or so. Between July-September the SBP had purchased $400 million from the open market.

FOREX RESERVES: Heavy dollar buying last month increased the foreign exchange reserves of the central bank from $1.72 billion on October 6 to $1.94 billion on October 27, according to SBP’s statistics released here on Thursday.