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Currency market treads water

Published Apr 21, 2017 06:59am

KARACHI: The currency market that normally responds to political events shrugged off the court’s ruling. “There was no impact on the currency market, either before or after the ruling,” said Malik Bostan, president of the Forex Association of Pakistan.

He dismissed reports that dollars were not available in the market. “It’s false. We have surplus dollars and no extra demand was noted” on Thursday, he said.

After stocks, the currency market is considered as the second-biggest speculative market, particularly in Pakistan, as it reacts to changes in economic/political scenario.

Market experts and currency dealers anticipated a change in the exchange rate after the Supreme Court’s decision in the Panama Papers case.

“We were expecting some change in the exchange rate in kerb market but the [court’s] decision did not create any ripple in the currency market. The local currency did appreciate slightly on Thursday,” said Atif Ahmed, a currency dealer in the inter-bank market.

The State Bank also plays a role to keep the inter-bank market stable by influencing the prices and there is an unseen red line for the currency dealers.

Experts said the instability may emerge once the joint investigation team, to be formed after the Supreme Court’s decision, begins its job.

The team will seek testimony from Mr Sharif and his sons and investigate the money trail within two months.

“The 60 days could be disturbing since the media hype could create uncertainty for the government and the market,” money market expert S.S. Iqbal said.

Published in Dawn, April 21st, 2017