KARACHI: After a long spell of volatility, rupee showed stability during the week ended on Friday while demand for dollar remained high, with reserves falling on day-to-day basis.
The new government could hardly see a stable exchange rate since it came into power in the first week of June while the currency lost 12 per cent till Sept 26 against the dollar.
The same day the State Bank pumped about $60 million and the rupee appreciated by 5pc in a single day, creating a history for local currency appreciation.
Since then the stability prevailed in the inter-bank market.
Since Sept 26, rupee shed just 66 paisa against the dollar and was traded at Rs106.16 in the inter-bank market.
The situation is encouraging for importers and other stakeholders, but market experts have been showing doubts over sustainability of the exchange rate while the statement of the State Bank’s governor further strengthened their doubt.
The SBP governor said few days back that each day $25 million is being smuggled out.
The report fell like a bomb shell for stakeholders in the currency markets while currency dealers said the artificial arrangement for rupee stability would not last for a longer period.
However, the State Bank on Friday came out with a statement trying to mitigate the serious implications of the governor’s statement.
“This movement of currency is not a current phenomenon, but that it has been going on for years and that the SBP has been voicing concerns in the past to the relevant law enforcement authorities to arrest this smuggling across borders,” said the SBP.
Further, he said that the ‘amount is estimated to be up to $25m but that no one can quantify it precisely on any given day.’
The dealers said dollars are being invested in other countries by the rich Pakistanis.
To save their melting rupee savings, many have saved their dollars in bank lockers not taking the risk of being confiscated by the government; though the government cannot use these dollars held by the private commercial banks. Laws were introduced during General Musharraf era to protect the private dollar savings.