KARACHI, May 10: The State Bank bought more than $300 million from the inter-bank market last month and the purchase is going on.
Senior bankers say the $300 million plus buying includes both outright and forward purchase. They say the SBP dollar buying in forward has enabled it to keep the inter-bank foreign exchange market from showing unusual panic.
“We know that at the time of need the central bank can close out the forward deal and sell the dollars in the market,” said treasurer of a major foreign bank.
The State Bank has been making aggressive dollar buying from the inter-bank market after September 11 attacks on the US that accelerated inflow of foreign exchange into the country.
No official figure is available about total SBP dollar buying from banks since then but bankers say the amount is somewhere between $2.5-$3 billion. In addition the central bank has bought $1 billion plus from the open market between July/April 2001/02.
The aggressive dollar buying of the central bank has enabled the country to build up foreign exchange reserves and also meet external liabilities sufficiently.
Bankers say what kept the foreign exchange market cool after Wednesday’s bomb blast was that bankers knew that the SBP not only has enough reserves it is also capable of countering any move for dollar holding. Pakistan currently has $5.3 billion liquid forex reserves of which $3.5 billion is with the SBP and $1.8 billion with other banks.
“Flight of capital is also less likely because the rupee is strong enough to fight back and also because major economies are still struggling to come out of recession,” said country head of a foreign bank.
