KARACHI, Nov 1: The rupee on Monday gained 48 paisa or 0.8 per cent value against the US dollar as the State Bank started paying oil import bills and also sold dollars in the market to stabilize the local unit.
Senior bankers said the rupee closed at 60.88, up from the weekend close of 61.36 after the central bank paid a $15-20 million oil import bill and also sold dollars in the inter-bank market.
The amount of the dollars sold by the SBP could not be ascertained but for most bankers it was below $10 million. The central bank started paying for oil import bills as part of its strategy to lift the sagging rupee that lost 5.5 per cent value in four months of this fiscal year i.e. between July and October 2004.
The rupee declined by such a high margin as trade deficit grew larger due to soaring international oil prices and higher imports of oil and machinery into the country. Trade deficit expanded to $839 million in July-September this year from $144 million a year ago.
On Saturday, SBP Governor Dr Ishrat Husain had announced at a press briefing that the central bank would pay for all oil import bills from its foreign exchange reserves till the international oil prices stabilize. The central bank notified this decision on Monday and also tightened some rules relating to foreign exchange management to check outflows and stabilize the local unit. It also stopped banks from transacting foreign exchange business in the inter-bank market after 12:00 noon during Ramazan.
Bankers said the rupee gained as a combined result of all these measures. They said the local currency may gain further in the short-term. But in the long-term it may remain under pressure unless oil prices fall substantially and inflows of foreign exchange rise.
