KARACHI, Sept 6: The US dollar on Friday shed six paisa more against the rupee in the inter-bank market. The US currency lost its value as exporters hurriedly sold foreign exchange earnings anticipating a further fall of the dollar on the back of rising foreign exchange inflows.

Senior bankers said the US unit closed at Rs59.26/Rs59.28 for ready buying/selling on Friday against the Thursday close of Rs59.32/Rs59.34. In the kerb market also the dollar lost five paisa for selling to close at Rs59.15. Some leading currency dealers said during the day the dollar traded as low as Rs59.12.

On August 26 the dollar had shed 22 paisa in a single session in the inter-bank market. It had fallen to Rs59.31/Rs59.33 from Rs59.53/Rs59.55 a day earlier as the State Bank had stopped defending it above Rs59.50 for the benefit of the exporters.

In the kerb market also the dollar had lost 25 paisa to close at Rs59.25/Rs59.35 for spot buying and selling that day.

Since then the dollar has been trading at a little more than Rs59.30 in the inter-bank market. This is for the first time that the US unit has fallen below this level and senior bankers say it seems set to lose more of its value in the coming days.

“The central bank may let the dollar lose more of its extra weight by the month-end,” said treasurer of a major foreign bank. Heads of some local and foreign banks attribute the gradual fall of the dollar to the national elections scheduled for next month.

“I think the government wants to gain some political mileage by letting the dollar fall further before elections,” said head of a major foreign bank who refused to go on record. Sources close to the Ministry of Finance had also told Dawn late last month that the overvalued dollar would lose some extra weight in August-September suggesting that the SBP would stop defending it.

Senior bankers said the State Bank did not make any attempt on Friday to let the dollar regain its lost value. “The exact loss of six paisa is not that important. What is important is that this had become a comfort level for exporters since August 26,” said treasurer of a local private bank. “Now that the dollar has fallen below this psychologically important level I suppose the sale of export dollars will pick up further forcing the dollar further down.”

Senior bankers say that conversion of frozen foreign currency accounts has also picked up more pace this month thus increasing the level of dollar supply in the market.

“Exporters selling and conversion of foreign currency accounts have gone up on an assumption that the dollar would be allowed to shed as much value as possible before elections,” said head of a foreign bank.

Politics aside the dollar seems set to come further down also because home remittances have been on the rise; the dollar is cheaper in the kerb market, thereby, limiting the scope of under- invoicing and over-invoicing; foreign portfolio investment is picking up with the stock markets being bullish — and the foreign exchange reserves are swelling. On August 31 the reserves rose to $7.5 billion, showing an increase of roughly $200 million within a week. The country is also set to receive about a hundred million inflow within next seven days from the Consortium of Abu Dhabi Group that has purchased state-run United Bank for Rs12.35 billion.

The group that got the letter of acceptance from Privatization Commission on Friday is supposed to pay 50 per cent of this amount within seven days and the remaining 50 per cent in next 45 days.