KARACH: The State Bank made a payment of $146 million to the IMF on Monday which pushed up dollar in the open market to cross Rs 100.
The dollar was traded as high as Rs100.10 in the open while in inter-bank market, dealers said, they traded dollar at Rs98 which was higher than the band in which it was traded for past few weeks ie Rs97.50-90.
There is a strong perception in the currency market that debt repayments to IMF would empty State Bank’s coffer. The State Bank has, however, been assuring that repayments to IMF would not be difficult.
Another big payment to IMF is due in the last week of the current month which might accentuate the trend in the currency market.
“We have paid $145.79 million today and another payment of about $395 million is due on Feb 26,” said Syed Wasimuddin, Chief spokesman for the State Bank.
Market sentiments were depressed on Monday despite the news that overseas Pakistanis have sent over $8.2 billion in 7 months, 10 per cent higher than last year.
Currency dealers in the inter-bank market said that despite higher remittances reserves of the State Bank are falling, generating anxiety.
“On the other hand, we don’t see inflows from abroad which means erosion of more foreign exchange reserves,” said Atif Ahmed, a currency dealer in the inter-bank market.
He said the current account is reflecting deficit which means deficit could rise as the financial year approaches closer.
“The shallow and weak currency market accepts impacts of bad news about economy as well as politics,” said Atif.
The State Bank’s foreign exchange reserves on the 1st of this month were $8.586 billion. This is almost equal to remittance sent by overseas Pakistanis in the last seven months.
“Payment to IMF has created pressure on exchange rate which depreciated the local currency against the dollar,” said Mohammad Sohail, CEO of Topline Securities.
“I believe the rupee has settled at Rs100 per dollar,” said Anwar Jamal.
Earlier, the dollar had touched Rs100 twice but later it lost the grip. Now slowly it has reached Rs100.
“Retailers might be selling dollar at Rs100, but we don’t sell at this rate. We sold dollars at Rs99.80 to retailers (B-category exchange companies) with the advice to charge only 10 paisa per dollar,” said Malik Bostan, Chairman, Exchange Companies Association of Pakistan.
The State Bank said that till 2015, Pakistan will pay 3.497 billion SDR (Special Drawing Right) to IMF, including payment of 258.42 million due on Feb 26.
Analysts believe that the situation would not improve unless foreign investors are attracted by the country. In fact, disinvestment was more than the investment during the year.