November 16, 2001	Friday	Shaba'an 29, 1422

KARACHI, Nov 15: The US dollar that had shot up to Rs62.60 in the kerb market on Wednesday fell to Rs61.60 on Thursday as speculators made panic-selling and also suspended forward buying/ selling for the time being.

The greenback closed at Rs61.40/61.60 for spot buying and selling on Thursday against the previous close of Rs62.40/62.60.

In the inter-bank market also the greenback almost unchanged around Rs61.20/61.25 for ready buying and selling on Thursday.

Money changers said the dollar fell as speculators not only sold a couple of millions of dollars in panic and also refrained from entering into BATA or forward buying/selling. They said one of the reasons why the dollar had skyrocketed to Rs62.60 on Wednesday was that some leading money changers had failed to honour BATA commitments as the sources of dollar supply had dried up. But President of Forex Association of Pakistan Malik Bostan insists that it was speculative buying in connivance of banks that had pushed up the dollar to a new peak on Wednesday. And he claims that the greenback fell on Thursday on “intervention” by the Forex Association of Pakistan that groups 400 money changers but is still not registered.

“We sold $15 million in two days to keep bring the dollar down to this level,” boasted Malik Bostan. “We brought dollars from Dubai,” was his terse reply when Dawn asked how on earth the Association managed to pump in $15 million in a market where the daily trading volume does not rise past $5 million in good days.

Bostan would not name those who sold dollars into the market. So the volume of the intervention claimed by him could not be verified independently. But two very prominent money changers contacted by Dawn said they were not aware of any intervention.

The big two whose offices are located on I.I. Chundrigar Road said what had stripped the dollar of its extra weight was that some speculators sold a couple of millions of dollars in panic.

“Besides the market suspended BATA for the time being,” one of them remarked. Bankers also said that many speculators who had bought several millions of dollars earlier this week for profit taking offloaded their positions.

On Wednesday when the dollar had risen by Rs1.90 to Rs62.60 Malik Bostan had charged banks of conniving with the speculators without naming them. Foreign Exchange Advisor of the State Bank Zafar M. Shaikh had refuted him.

No senior SBP official could be contacted on Thursday but some senior bankers confirmed that a few leading local and foreign banks were seen buying dollars for their customers.

But they said there was nothing wrong in it as the customers who maintain fresh foreign currency accounts with banks do feed these accounts by purchases from the kerb market.

Banks cannot buy dollars from the kerb for meeting their own requirements unless permitted by the State Bank. But if they buy dollars for ghost customers (as some money changers say) then it would be viewed as their own buying.

Besides exporters often buy dollars from the kerb and sell in the inter-bank market showing the same as realization of overdue export proceeds. At times importers also start buy dollars from kerb to finance letters of credit.

All this happens when either the premium paid on the dollars bought from the kerb market falls — or when the price of the dollar in the kerb market is lower than in the inter-bank market.

The dramatic decline in the dollar value since September 11 had created the second scenario that ultimately led to increased buying of dollars from the kerb.