KARACHI: Panic in open currency market compelled the banks to devalue US dollar by 3.1 per cent, or Rs4, per dollar on Monday. However, the greenback has lost over 11 per cent in the kerb market since the general elections held on July 25.

The US dollar was traded as low as Rs124 in the interbank market while some said the banks bought at Rs122 during the day. Bankers said the dollar was closed at Rs123.50.

However, the open market witnessed a high degree of exploitation by the exchange companies as they bought dollar as low as Rs115-16 but sold in the range of Rs120-22. This margin of profit never witnessed before.

Just after the general elections, the exchange rate quickly changed in favour of the rupee which sharply appreciated against the dollar on a day-to-day basis.

The reversal of dollar price in the interbank market was surprising since the State Bank of Pakistan (SBP) had adjusted exchange rate to protect the rupee from over valuation. The central bank devalued the rupee by 3.8 per cent on June 11 and on July 16 again adjusted it by 5.7 per cent bringing down the local currency to Rs128 per dollar saying this movement in the exchange rates reflects the demand-supply gap of the foreign exchange in the interbank market.

SBP Chief Spokesman Abid Qamar when contacted told Dawn on Monday that the devaluation of dollar reflects market sentiments.

When asked was there any justification for last devaluation of 5.7pc, he said “the adjustments were made in the wake of economic fundamentals which are still the same.”

During FY18 the rupee was devalued by over 20pc to boost exports and discourage surging imports which created a trade deficit of about $37bn resulting in a record current account deficit of $18bn.

This sharp fall in the exchange rate was killing for the overseas Pakistanis while those who keep their savings in dollars had to pay heavy cost. This was the second time that Pakistanis had to lose heavily while keeping dollar as their safe investments. Four years back former finance minister Ishaq Dar forcibly brought back the dollar rate from Rs112 to Rs98, a depreciation of over 12pc.The exchange companies were making huge profits with this wild depreciation of dollars.

The common people complained that most of the currency dealers were not ready to buy dollars as they had not cash but they were ready to buy at the lowest rate that was in the range of Rs115-118.

“The buying and selling rates were Rs118 and Rs122 in the open market, showing an unusual gap of Rs4,” said Malik Bostan, President Forex Association of Pakistan. He admitted that some currency dealers were buying dollars even lower than Rs118.

The market was full of dollar sellers while the buyers were not more than 10pc, mostly those who were buying dollars and Saudi riyals for performing haj.

Representative organisations of exchange companies did not release the actual price in of the open market, they used to do it as they don’t take responsibility of variations in the exchange rate at different places and different companies.

Published in Dawn, July 31st, 2018