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KARACHI: Exporters queued for the entire day on Friday to sell dollars in millions. It further plunged the greenback value to below Rs103 in both open and inter-bank markets.
The fast devaluation of dollar panicked those exporters who had parked their dollars out of the financial system in hope of earning premium. Watching the new trend evolve, their nerves broke down on the last working day of the week as they head to hit the market. Dollar was traded at Rs102.90-95 in the inter-bank market on Friday.
“Friday was the exporters’ day. It seemed it was taken as the last day to sell their holdings since market expects further erosion in the value of dollar against rupee in days ahead,” said Atif Ahmed, a currency dealer in the inter-bank market.
Exporters used to keep their proceeds for more than the allowed 130 days in a hope to sell their holdings at a better rate, but during the last five days the dollar lost Rs2.5.
Before this massive devaluation of dollar the exchange rate remained stable at Rs105-06 for a period of about two months. The finance minister has created history by bringing down the dollar to a level which looked impossible to bankers, currency dealers and analysts said.
“The minister has set a new trend as he succeeded to bring dollar at Rs103 from Rs112, especially when the foreign exchange reserves of the State Bank are still below the comfortable level,” said a banker.
This sudden fall in dollar’s value has dealt a serious blow to the banks as their holdings of billions of dollars were devalued. Banks hold $4.8bn in their reserves.
Bankers and analysts said the devaluation trend shows the greenback will soon see Rs100. “There is no two opinion about the Rs100 for dollar in the market,” said a currency dealer. The finance minister had claimed that he would bring back dollar to Rs98, the rate at the time when the new government took charge in Islamabad.
According to bankers, the new trend taught importers and exporters a lesson. Importers used to set off panic in the market with frequent buying while exporters used to disappear from the market when dollars were needed.
