KARACHI, July 13: The US dollar shed 23 paisa more against the rupee in the inter-bank market on Saturday as panic selling by exporters continued. That brings the total loss the dollar has suffered against the local currency to 42 paisa (or 0.7 per cent) within two days. But this has so far not lured importers into forward buying as they think that the greenback may fall further.

Senior bankers said the dollar closed at Rs59.62/Rs59.64 for buying and selling against the Friday close of Rs59.85/Rs59.87.

The dollar had lost 19 paisa against the rupee on Friday when it fell below the crucial level of Rs60 and the State Bank did not come to lift it. On Saturday also the SBP watched the fall of the dollar in silence.

Importers say and senior bankers confirm that the decline in the dollar value has not triggered forward buying that has been on the halt for past few months. “Importers are just sitting cool,” says a foreign banker adding that reports of ever-rising foreign exchange reserves have led importers to think that the dollar may fall further.

“We believe the dollar may fall further...so there is no need to go for forward buying now,” says Vice chairman of Pakistan Automobile Spare Parts Importers & Dealers Association Sheikh Munir Ahmad. “The reserves have more than doubled...from $3.2 billion (at the start of fiscal 2001/02) to about $6.5 billion... so we think the dollar is bound to shed more value now,” he says.

The chairman of Pakistan Commodity Importers Association Raees Ashraf Tarmohammad also believes that it is no time to start forward buying as the US unit is still heavily overvalued. “The real value of the dollar is much lesser than what it is now. The State Bank has kept the dollar strong to benefit the exporters. It has to fall further.”

The two importers named here and many out there in the market say the SBP should let the dollar throwaway some of its extra weight also in recognition of the fact that the US currency has lately declined sharply against the euro and pound sterling as well as Japanese yen.

Bankers second this view. “If the dollar is kept too heavily over-valued just to benefit the exporters the bubble so created in the exchange rate may burst one day to damage the entire economy,” says treasurer of a major foreign bank. Importers also believe that the central bank should either stop defending the dollar at all — or if it feels that a cushion is still needed for the exporters than the US unit may be defended at a lower level.

“The central bank should not hold the dollar stable just for the benefit of the exporters,” says Raees Ashraf. “In a country like Pakistan where the share of value-added items is very low in overall exports...a weaker dollar is not very much advisable.”

“The benefits (of keeping dollar strong) are limited whereas the benefits of a weak dollar are all-encompassing and good for the whole economy.”

Sheikh Munir Ahmad suggests that the central bank should at least lower the level at which it intends to keep the dollar stable.

But exporters continue to lament that a weaker dollar will hit them too hard to meet the export target of $10 billion this year. “Exporters will be hit hard by this sudden fall of the dollar,” says Vice Chairman of the Association Mushtaq A. Vohra.

“The rising cost of inputs due to increased power rates and higher cotton prices and increased wage bills is eroding the exporters competitiveness in the world market,” he said adding that a weaker dollar would make exports even more uncompetitive.

“We do realize that a weaker dollar has some plus points as well but for a sustainable economic growth Pakistan needs to boost its exports,” he said while talking to Dawn by telephone.

“Aids and grants may not keep flowing in for the eternity... you need to earn foreign exchange on your own...and increase the exports,” Vohra remarks. “How on earth we can increase exports if the cost of inputs keep going up and the dollar continues sliding downward,” he asks.

KERB MARKET: In the kerb market also the dollar lost another 15 paisa against the rupee on Saturday. Forex Association of Pakistan said the dollar closed at Rs59.75/Rs59.85 for spot buying and selling against the last close of Rs59.90/Rs60.00.