KARACHI: The US dollar took a u-turn on Friday, depreciated the local currency and destabilised the exchange rate that had been in favour of rupee for the last three months.
Finance Minster Ishaq Dar’s statement that the dollar would be kept around Rs98 to support the export industry created panic-like situation in the inter-bank market.
The greenback appreciated by over one per cent in just one session from Rs96.70 to Rs97.70. Exporters are seeking compensation from the government for the loss they had to incur due to sudden fall in value of dollar.
While yields on export proceeds fell significantly due to over 9pc deprecation in a few months, some exporters who were reluctant to bring back millions of dollars in the hope to earn more also faced huge losses.
Bankers said that importers rushed to book the dollar as much as possible before it reaches the border line of Rs98 set by the finance minister.
There is no doubt that the line drawn by the minister played a key role in boosting sentiments in favour of dollar and importers demand was due to this change in the strategy, said Atif Ahmed, a currency dealer in the inter-bank market.
Currency dealers said that a few big payments are also due on Friday which accelerated dollar demand in the banking market.
“It seems that the exchange rate is a one-man show. The minister is playing with the exchange rate; dollar goes down when he wants, and goes up when he likes. This is not a sign of stability,” said Aamir Aziz, a textile manufacturer and exporter.
He urged the government to stabilise the exchange rate with minimum fluctuations otherwise these ups and downs would shake confidence of the business community and hurt the financial system also.
“The open market also witnessed dollar appreciation but the State Bank, the Ministry of Finance and exchange companies have made a strategy to keep the dollar in the range of Rs98 to Rs100 in the open market,” said Malik Bostan, Chairman, Exchange Companies Association of Pakistan.
The dollar was traded as high as Rs99.80 in the open market. It gained Rs1.40 in just one session. A number of currency dealers in the open market said the dollar can cross Rs100 on Saturday.
“We will intervene in the market to keep the dollar at Rs100 and the State Bank has assured supply if there is any physical shortage,” said Bostan.