KARACHI: The dollar weakened further on Monday, losing within a week 5 per cent of its value against the rupee. It traded at Rs100.90 before closing at Rs101.12 in the inter-bank and at Rs101 in the open market.
Exporters, dollar holders and speculators are panicking over the situation and messages are being sent to the ministry of finance to contain the trend, but currency dealers say the greenback is likely to fall below Rs100 over the next few days.
Both inter-bank and open market were flooded with the dollars with people selling the US currency, which had been yielding them high profit before the current trend started. Buyers were almost absent from the currency market.
Inter-bank dealers said the daily market turnover (selling to banks) went beyond $400 million against average earlier inflows of about $300m.
“Our market was limited to about $10m which is now $20m per day, meaning even small investors are selling their holdings,” said Malik Bostan, chairman of the Exchange Companies Association of Pakistan.
Banking sources said exporters had started saying that exports would fall with the massive appreciation of the rupee.
“What are we trying to achieve with a stronger rupee? Many of our export industries like rice, yarn and sugar have very thin margins. How can they compete with other regional traders if the rupee appreciates 4-5pc in a week? The current situation is very critical for some industries,” said Faisal Mamsa of Landmark Capital.
But currency dealers and experts said the rupee had been artificially depreciated over the past three years and the dollar almost doubled its value from Rs60 to Rs110.
“The dollar will easily come below Rs100. There must not be any effort by the government to stop the current trend because it will ultimately benefit the country,” said Mr Bostan. The depreciation of the dollar would result in a massive reduction in cost of imports, he added.
“The banks are expecting the dollar to fall to about Rs100 on Tuesday. We don’t see any hurdle in the free fall of the dollar because exporters and investors are selling their holdings at the earliest,” said Atif Ahmed, an inter-bank dealer.
“The trade with Afghanistan will be in dollars from 17th of this month which means Pakistan will receive up to $2 billion per year through this source,” he said.
