KARACHI, Sept 1: Unlike in the past Pak-Arab Refinery Co. will not roll-over a $100 million instalment due next week out of its $350 million dollar-rupee swap with a consortium of banks.

The consortium banks are (i) National Bank (ii) Habib Bank (iii) United Bank (iv) Muslim Commercial Bank and (v) Standard Chartered. Bankers close to State Bank say the central bank has allowed the company to make the payment. But the company will not buy dollars from banks because that will weaken the rupee.

"The State Bank is going to support us and we will settle the $100m payment," said a source in Parco without elaborating. SBP officials were not available to confirm this. But sources close to the central bank said the central bank would most likely sell dollars to banks for onward selling to Parco so that the rupee remains stable.

In August SBP rather forced Parco to roll-over a $100 million second instalment of the $350 million dollar-rupee swap it had contracted with a consortium of banks to clear a Japanese loan before time. In July it had let the company settle the first instalment of $50 million.

Bankers say that the roll-over of the $100 million second instalment caused a financial loss to the company that was earlier forced into entering a $350 million main dollar-rupee swap instead of making outright purchase of dollars from the market.

The central bank had done this because the ministry of finance had not taken it into confidence before allowing Parco to pre-pay a Japanese loan it had secured for construction of its refinery in Multan.

In the meantime the rupee lost three paisa more to US dollar on Wednesday on increased buying by banks for their customers. The rupee closed at 58.78 a dollar down from 58.75 on Tuesday. Some bankers said the rupee sank to 58.80 a dollar before closing at 58.78.

It could not be learnt officially whether the State Bank sold dollars to keep the rupee from falling further. Treasurer of a foreign bank said the SBP did sell dollars without quantifying the amount.

Some bankers said the rupee may come under pressure this week as a private sector oil refinery is to buy $15 million for outward remittance. The rupee has lost 66 paisa or 1.1 per cent value against the dollar so far during this fiscal year coming down to 58.78 a dollar on September 1 from 58.12 on June 30.