May 30, 2006	Tuesday	Jumadi-ul-Awwal 2, 1427

KARACHI, May 29: The US dollar on Monday hit 19-month high against the rupee amid fears that the government might impose some restrictions on imports which swelled to record high during the current fiscal.

Currency dealers said a number of factors were involved in pushing up the demand for dollars including the closure of US and British markets on Monday for the Memorial Day and spring bank holiday, respectively, which reduced the supply of greenback.

The dollar was available at Rs60.33 in the inter-bank market while in the open market the rate touched Rs60.75.

“The dollar appreciation was mainly because of high demand and low supply as the importers remained busy in spot buying for the whole day,” said Asif, a currency dealer.

The greenback has been falling against all the major world currencies for more than a year due to huge US trade deficit, which had been depressing the greenback. The pound sterling rose to 1.91 a dollar last week and currency strategists predicted that the pound may touch $2-mark in near-future.

“The greenback is not going up it is the rupee which is losing and is obvious from the declining purchasing power of the greenback the world over,” said Sajid, another currency analyst.

Currency dealers said that the dollar may continue gaining against the rupee till the announcement of FY07 budget. They said that car importers had also geared up their activity fearing that the government might ban import of reconditioned cars.

“The importers rightly feel that the government will take some measures to reduce the record trade deficit,” said Sajid.

The trade deficit is expected to touch $11 billion by the end of the current fiscal year. The government has announced that the trade deficit could be met through financing, which would come through privatisation proceeds, remittances of overseas Pakistani workers and foreign investments.

“The rising deficit has already put pressure on dollar demand as the government is making payments of oil imports and other debt servicing,” said a banker. Bankers said that the State Bank was also involved in making swaps and picking up dollars for its payments.

However, they were not aware of any dollar buying by the SBP on Monday.

The open market also witnessed a jump of 25 paisa to push the dollar at Rs60.75. At the close it slipped by 5 paisa at Rs60.70. The dealers said that the market was extremely short on Monday.