KARACHI: The dollar gained over one per cent against the local currency in interbank market during the week ended on Friday.

Currency dealers in the banking said the exchange rate is currently under no pressure or influence of the State Bank of Pakistan (SBP).

“There are no guidelines from SBP for the exchange rate which helps the dollar gain against the rupee.

Most probably it is due to the presence of International Monetary Fund’s team in Pakistan,” said a banker.

SBP’s critically low levels of reserves have restricted its ability to manipulate the exchange rate, forcing it to keep a floating rate policy, which is also favoured by the International Monetary Fund (IMF).

The foreign exchange reserves held by SBP as of Nov 2 were $7.678bn. The week opened with dollar trading at Rs132.6 on Monday, and rose to Rs134.10 in the interbank on Friday.

“The Friday rate will be applicable till next Tuesday since New York will be closed on Monday due to a holiday,” said the banker.

Other money experts said the greenback could further appreciate in the coming week; however, a halt is possible if Saudi Arabia’s promised $3bn lands in the SBP account. Finance Minister said $1bn would come by next week.

“There was neither a shortage nor an excess demand yet the dollar gained 0.9pc against the rupee in open market during the week. I believe it is the reflection of the rising interbank rate,” said Exchange Companies Association of Pakistan General Secretary Zafar Paracha. The dollar traded at Rs133.20 on Friday from Rs132 on Monday.

However, he said sentiment in the currency market is depressive due to media reports about the lack of Chinese support for balance of payment crisis which would keep the foreign exchange reserves under pressure because of debt servicing.

Published in Dawn, November 11th, 2018