KARACHI, March 3: Greenback gained strength on Friday as it added to its value at least five paisa in the interbank currency market. However, the main reason for the increase was the presence of huge liquidity in the market, which suddenly increased the demand for the US currency.

Money dealers said they were expecting Open Market Operations (OMO) by the State Bank but it was avoided. They said up to Rs20 billion were available in money market which were ultimately, diverted towards the currency market.

“The demand for greenback was very high on Friday and most of the dealers were busy for swaps of two weeks,” said Asif Bhai, a currency dealer.

He said up to $40 million were booked for two weeks swaps. The SBP used to siphon off liquidity from the market to keep the exchange rate stable.

“The demand for the US currency is already high these days which increased the rupee price from Rs59.91 to Rs59.96 on Friday,” said Asif.

Last week, the dollar crossed the psychological barrier of Rs60 but again slipped below the mark. Dealers said that dollar would gain more strength in future as its demand was increasing.

The SBP has been buying dollars from the market to keep its depleting reserves intact. The country’s reserves have been slashed by $1.1 billion since the beginning of current fiscal year in July 2005.

“The demand will remain high to meet the requirement of imports at enhanced oil prices and the fear of widening of the record trade deficit,” he said. The trade deficit is expected to reach $10 billion by the end of the current fiscal.