KARACHI: The State Bank of Pakistan on Friday reported the closing price of the US dollar at Rs277.62 in the interbank market, a depreciation of 96 paise against the rupee.

Meanwhile, the open market reported the dollar price at Rs277 compared to Rs278 a day earlier, a decline of Re1.

This daily decline has become a routine matter for both the banking and open markets. The open market apparently has ample liquidity, which ultimately goes to banks and improves their foreign exchange reserves.

But when asked about the reason for this steady decline, bankers point to the central bank, saying that it sets the daily dollar rate for banks to follow.

But the SBP has a different point of view, stressing that the interbank currency trade is guided by a market-based exchange rate, based on supply and demand dynamics.

“The day-to-day decline in the dollar rate is simply the outcome of supply and demand of dollars in the interbank market,” SBP’s chief spokesman Abid Qamar told Dawn.

However, bankers still insist that the central bank is guiding the steady decline. They point to the fact that SBP is now the biggest buyer from the banking market, purchasing foreign exchange through forward booking by offering a slightly higher rate than the ready rate, despite the dollar having declined each day.

Bankers Dawn spoke to said exporters had already sold their future dollars at ready or forward rates. “The two-month forward is being offered at Re1 per dollar more than the ready rate, which is highly attractive for exporters witnessing a daily decline in the exchange rate,” said Atif Ahmed, a currency dealer in the interbank market.

“Despite the higher supply of dollars, the pressure on exchange rate is still there, particularly as demand from importers is increasing each day,” he said.

Currency dealers said an increase of 5.3 per cent in remittances in September was a positive sign after a declining trend for a long time.

Published in Dawn, October 14th, 2023

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Electable politics
Updated 04 Dec, 2023

Electable politics

With the PTI still on the wrong side of the political equation, the prospects will be bright for whoever takes the lead.
War of narratives
04 Dec, 2023

War of narratives

MILITARILY, there is no match between the Israeli war machine, and the defenceless people of Gaza. On one side is a...
Returns on deposits
04 Dec, 2023

Returns on deposits

DESPITE the deceleration of deposit mobilisation, bank deposits have jumped to a record high of Rs25.6tr in FY23. ...
Promises, promises
Updated 03 Dec, 2023

Promises, promises

The climate crisis transcends national borders and political agendas, demanding a unified, decisive response.
PCB’s strange decision
03 Dec, 2023

PCB’s strange decision

THE Pakistan Cricket Board’s decision-making and the way it is being run has become a joke. A day after appointing...
Resettling Afghans
03 Dec, 2023

Resettling Afghans

FOR two years now, since the Afghan Taliban took Kabul, thousands of Afghans in Pakistan who had worked for Western...