KARACHI: The US dollar kept pressing the local currency on Monday and appreciated Rs1.21 to close at Rs209.96 in the interbank market.

However, the State Bank of Pakistan’s (SBP) dollar price was lower than the one quoted by the exchange companies which sell 95 per cent of their dollars to the banks.

The Exchange Companies’ Association of Pakistan quoted the greenback price at Rs210.20 while the bankers also said the price was higher than the SBP’s closing rate.

“The first session saw greenback crossing Rs209 per dollar while the tom (tomorrow) value was more than Rs210. It means the next day the dollar may open at Rs211,” said Atif Ahmed, a currency dealer in the interbank market.

However, the currency market remained in the grip of uncertainty and rumours that banks have stopped opening letters of credit (LCs).

Mr Atif said these days rumours are part and parcel of the currency market since the situation is fluid due to low foreign exchange reserves.

When contacted, the SBP also denied such a situation and said the LCs were being opened as usual. “State Bank has not stopped banks from making import payments. Even today, roughly about $200m import payments have been executed,” SBP Chief Spokesman Abid Qamar told Dawn on Monday.

The SBP has, however, required prior approval before the opening of LCs or registration of contracts for certain types of imports like cars (CKD), cellphones and certain types of machinery. But these instructions were issued on May 20 and not today, he said.

On May 20, the SBP issued a circular after the decision of the federal government to ban imports of luxury and non-essential goods. The decision meant to consume fewer dollars while saving the economy from imported inflation. So far, the country’s import bill has already crossed $70 billion in the outgoing year.

Experts have already warned that while no sector of the economy would be immune to the fallout from the rupee’s steep devaluation, key areas such as debt servicing and imports for industry and food items will be among the first to be affected.

Finance Minister Miftah Ismail on Monday dropped a hint of striking a deal with the IMF within a couple of days. “If it happens, the exchange rate would get temporary support for a brief period since the trade and the current account and trade deficits have been swelling,” currency experts said.

They stressed that the government must find other sources for dollar inflows to support the declining foreign exchange reserves of the country.

Published in Dawn,June 21st, 2022