KARACHI, May 23: The US dollar on Thursday shot up to Rs61.40 for spot selling in the kerb market against the previous close of Rs60.75 on panic buying fuelled by growing fear of war between Pakistan and India and reinforced by the closure of the stock market.

But finally it finished at Rs61.10/Rs61.20 up 45 paisa from Wednesday’s close of Rs60.65/Rs60.75 as the State Bank sold a few million dollars into the market to stabilize the local currency.

Money changers claimed that in late hours — after the formal closing of the market — the dollar slipped further to Rs60.90 for spot selling. “I am ready to sell as much as 500,000 dollars at this rate,” Haji Haroon of Dubai Exchange said when Dawn asked him over telephone did he really mean the rate had come down to this level. Haji Haroon called Dawn again around 8:15 p.m. and claimed that the dollar was selling for Rs60.65/Rs 60.75 in next day value.

When challenged how on earth the greenback lost ground within hours, he claimed that several money changers had received fresh supplies from Dubai. But sources in the market said several leading money changers, including Haji Haroon, had been told by a senior SBP official that if they failed to bring the rate down the central bank might have to take stern action against them.

President of Forex Association of Pakistan, Malik Bostan said the rate had come down after the money changers had arranged additional supply of dollars from Dubai. He said the situation would improve further on Friday as the State Bank had allowed money changers to encash their TTs in dollars instead of rupee.

“That will provide us a big comfort,” he said and went on to say that the FAP too would start selling dollars in the market to prop up the rupee.

Several leading money changers, who declined to be identified, told Dawn the central bank had sold a few million dollars into the kerb market to stop the greenback from scaling new heights. But this could not be verified from the State Bank officials.

Foreign Exchange Advisor of SBP, Zafar Shaikh only confirmed to Dawn that he had allowed money changers to encash their TTs in dollars for the time being. “I have also told them that the SBP would provide them maximum support (to curb speculative buying of dollars),” he said after meeting half a dozen leading money changers, including Malik Bostan and Haji Haroon at his office.

Money changers said the closure of the stock market on fear of further loss of ground and Vajpayee’s threat of a “decisive war” carried by the press on Thursday led speculators to amass dollars from the kerb market.

They said the situation was more serious in Lahore,Peshawar and Islamabad where there was literally “a run on the dollars”.

They said some leading money changers have assured the SBP officials that they would supply enough dollars to these cities on Friday to keep the rupee from falling further. A press release issued by the FAP warned people not to go for speculative buying of dollars, adding that those who are out to amass greenbacks would incur losses as the US unit is set to fall in the coming days.

INTER-BANK: Whereas the dollar spiked dramatically in the kerb market it only inched up to gain a few paisa in the inter-bank market. Senior bankers said the dollar closed two paisa higher at Rs60.06/ Rs60.08 for ready buying and selling on Thursday against the previous close of Rs60.04/ Rs60.06. But some of them said the intra-day high of the dollar was no less than Rs60.12.