KARACHI: The dollar slid in the interbank and the open market on Friday, closing a week of turmoil and fluctuations that left currency traders reeling from anxiety.

In the interbank market, the dollar stayed in the range of Rs131.80 to Rs132.50 but the tom rate (tomorrow and now Monday rate) was set lower still, at Rs131.50. This is an appreciable fall from Rs133.64, where it had closed on Monday after the largest single day depreciation in over a decade. Bankers said the closing rate was Rs131.80 on Friday. The dollar lost 1.6 per cent or Rs2.1 in the last three days.

The open market closed at Rs132.50 after trading as low as Rs131.50, according to Malik Bostan, President Forex Association of Pakistan. “Sellers outnumbered buyers all day today,” he tells Dawn. “There was a surplus of dollars in the market, we had to surrender some to the interbank market by end of the day,” he says, adding that around $1m were bought by customers in the open market. Yesterday almost $10m arrived in the open market from remittances after banks in New York opened at the end of a three-day weekend. Remittances are all routed through New York, so even a one day closure creates a large bottleneck.

The scenario was a repeat of the events of July when the State Bank allowed the rupee to fall by 5pc to settle at Rs128.50 in the interbank market but it fell quickly to Rs121 within the next few days. The dollar never achieved the level of Rs128.50. It was being traded at Rs124.50 till Monday (Oct 8) but the local currency was again depreciated to about Rs134, the very next day. The open market witnessed a unique situation when the dollar was traded as low as Rs112 after depreciation of local currency in July.

“After touching Rs137 in panic on Oct 9, the State Bank barred to keep the dollar below Rs134. Now it looks that the depreciation was more than the required level and was unnecessarily appreciated by 7.5pc this month,” said a banker dealing in interbank currency market.

The open market also behaved in the same manner while the market was mostly dominated by sellers with small number of buyers. The dollar was available in ample quantity which helped buoy the rupee.

“Sellers of dollars played key role on Friday to bring down the prices in favour of the rupee,” said Anwar Jamal, a currency expert and dealer, adding that the inflow of remittances through exchange companies during the week was also high.

Published in Dawn, October 13th, 2018