KARACHI, March 12: As the US dollar slips below Rs60 in the inter-bank market bankers and exporters are trying to figure out what is the next level at which the State Bank will defend it.

“Exporters are very much disturbed at the fall of the dollar below Rs60,” said vice chairman of All Pakistan Textile Mills Association Mushtaq Vohra. “When we strike a deal we anticipate the rupee-dollar parity to be at a certain level at the time of realization of export orders. When the dollar falls sharply it reduces our profit.”

“We are now trying to figure out what is the next level at which the SBP may defend the dollar to save the exporters from booking more losses,” said convener, exports sub-committee of Aptma, Iqbal Ibrahim.

He said the exporters had got assurance from senior economic managers that the government would not let the dollar fall below Rs60. “It sounds strange to me that the dollar has crossed this barrier,” he observed.

The US dollar slipped below Rs60 in the inter-bank market on Monday and it did not rise above this psychologically important level on Tuesday also.

Senior bankers said the dollar closed at Rs59.93/Rs59.98 in the inter-bank market. They said in the deals transacted in next day value also the dollar was quoted below Rs60. “Unlike in the past the State Bank did not come to defend the dollar at Rs 60,” said a senior banker.

Is this an indication that the central banker is now ready to allow the dollar to trade below Rs 60 in the inter-bank market? Because the SBP has been holding the US unit firm above this mark to save the exporters from exchange rate losses. “I cannot really say if the fall of the dollar below Rs60 is a temporary thing or it is a major signal,” said treasurer of a large foreign bank.

But other foreign and local bankers were more frank. “It is the second straight day that the SBP has not defended the dollar at Rs60. If the US currency trades below this level for some more days we can say the SBP is going to defend the US currency at a different price,” said treasurer of another foreign bank.

“We anticipate the SBP defending the dollar at a broad range of Rs59.70-Rs60.30.”

Treasurer of a large local private bank said the fact that the SBP watched the fall of the dollar below Rs60 from the sidelines apparently indicates that it would now defend the dollar at a new level.

Central bankers avoid to comment on market-sensitive issues so it is difficult to say whether SBP is going to find another level for defending the dollar or it would let the dollar inch up again to rise past Rs 60.

The State Bank has purchased more than a billion dollars from the inter-bank market in the past five months to contain its fall after September 11.

The terror attack on the US that day and the ensuing US war against Afghanistan led many overseas Pakistanis to send home more foreign exchange through banks than via money changers. In addition to this many people brought back home part of the ill- gotten money that they had earlier deposited abroad but were now unable to retain there due to tightening of anti-money laundering laws after Sept 11.

This enhanced Pakistan’s foreign exchange reserves from $3.2 billion at the end of June 2001 to more than $5 billion by end of February 2002. In the meanwhile the dollar had to shed more than 6 per cent of its value against the rupee. That is where the shoe is pinching.

The exporters’ margin has reduced and their competitiveness fallen because of the heavy dollar depreciation. This coupled with an economic slump at home and in many parts of the world abroad has taken its toll on overall growth of exports as well.

In the first eight months of this fiscal year Pakistan’s exports totalled $5.8 billion only eclipsing hopes of fetching even $9 billion against the original target of $10.1 billion.

KERB MARKET: The rupee gained 20 paisa for selling in the kerb market on Tuesday where it closed at Rs60.20/ Rs60.25 for spot buying and selling against the previous close of Rs60.35/ Rs60.45.