KARACHI: The downfall of the rupee continued as it traded as low as Rs122.75 in the interbank rate on Thursday before finally settling at Rs121.39.

Bankers said the local currency lost about Rs1.40 against dollar and could have lost more if the State Bank of Pakistan had not intervened to stop this steep fall.

They noted that the demand in the interbank market was very high on account of the upcoming four-day closure of markets for Eid.

The high demand, they said, came from the $75 million required for oil payments while importers were also in a rush to get as much as they could and bought around $50m. This sudden need of about $125m created a demand and supply gap in the interbank market and thus, the rates went up.

Bankers said dollar rose to Rs123 but no deal at this rate was reported. However, they feared that the greenback could cross this barrier in the next sessions.

In the open market, dollar was traded as high as Rs123.50 compared to Rs122 a day earlier, reflecting that the open market is chasing the banking rates trying to get more than banks.

Despite higher inflows during Ramazan, the open market was facing drought-like situation as few sellers were available.

“Only a few people are selling their currencies, which is why most of the exchange companies are short of foreign exchange,” said Anwar Jamal, a currency dealer in the open market.

However, it was observed that small exchange companies deny selling dollars despite having stocks. The day-to-day devaluation of the rupee is a very strong reason for not selling the dollars – either by the exchange companies or common people.

Reserves edge up

Foreign exchange reserves held by the State Bank of Pakistan increased by $24 million to $10,065.6m during the week ended on Jun 8, the central bank reported in a press release on Thursday.

The total liquid foreign reserves of the country stood at $16,457.1m while holdings of the commercial banks were recorded at $6,391.5m.—Staff Reporter

Published in Dawn, June 15th, 2018