KARACHI, Feb 9: The US dollar lost 35 paisa more against the rupee in the open market this week bringing the total loss it suffered in two weeks to 80 paisa.

On Saturday the greenback finished at Rs59.90/Rs60 for spot buying and selling in the kerb market down from Rs60.25/ Rs60.35 a week earlier. Two weeks ago the dollar had closed at Rs60.70/Rs60.80.

At the present level of Rs59/Rs 60 the dollar has once again become cheaper in the kerb market than in the inter-bank market.

In the inter-bank market the dollar closed around Rs60.15/ Rs60.20 for ready buying and selling respectively.

Currency dealers link the decline of 80 paisa or 1.3 per cent in the value of dollar to dumping of the hard currency by big speculators who are now investing more in stock market and real estate.

Press reports about conversion of moneychangers outlets into foreign exchange companies before the close of this fiscal year has also dampened demand for dollars in the kerb. The State Bank has finalized draft rules for these companies and the same are expected to be announced shortly.

The rules are so designed that these companies will have to ensure maximum transparency of buying and selling of foreign exchange. This coupled with rising US pressure on Pakistan to check money laundering has made currency speculators cautious.

“Only big ones are still there...smaller speculators are fast getting out of this business,” said one of the top three moneychangers in the town who declined to be named. “Barring some big ones almost all speculators have started to pack up and quit.”

This is happening in the backdrop of increasing pressure from the donor agencies as well as the US to rein in money launderers.

Anti-money laundering officials of the US administration were in Pakistan this week to convince regulators and currency market players to stop money laundering. The IMF experts had also been frequenting Islamabad and Karachi in near past to bring home this point.

“Every time we meet officials of donor agencies or people from US administration we tell them that moneychangers in Pakistan are in no way involved in money laundering,” says president of Forex Association of Pakistan Malik Bostan. In saying so he just toes the official line: whatever comes in in the kerb market is from overseas Pakistanis. In other words the kerb market is only handling home remittances — and not dirty money that the US thinks is coming in from the supporters of terrorists operating in this region.

At present more than 400 licensed moneychangers are operating across Pakistan but only a handful of them are capable of working as exchange companies because of tougher rules that would be in place. Similarly the donor agencies and the US administration may not make any concession for money laundering in the foreseeable future. Hence the panic that has gripped most of them who are now off-loading their dollar holdings.

Pakistan’s new role in the post-Taliban regime in Afghanistan has also opened up business opportunities that are another big factor for increased supply of dollars into the kerb markets of Northern Pakistan. At the same time it has almost brought to a halt the outflow of dollars from Peshawar and Islamabad into Kabul and Kandahar. As a result, moneychangers particularly those based in NWFP and Balochistan are wallowing in dollar supply.

“This situation is not only going to remain...it is going to be more and more in favour of Pakistan,” says country head of a foreign bank. “My feeling is that there would be a constant supply of dollars in the market.”

Stock market leaders say the continuing fall of the dollar has brought new investors into the stock market and allowed the old ones to play a more aggressive role.

Real estate brokers also report more activity in their field —thanks to the fall of the dollar.

That the trend to hold hard currencies including the US dollar has been on the decline is evident from the falling value of some major currencies traded in the kerb.

During the week ended on February 9 Pound sterling fell from Rs86.10/Rs86.30 to Rs85.75/Rs85.95; Kuwaiti dinar from Rs198.85/Rs199.25 to Rs196.35/Rs196.75; Qatari dinar from Rs16.70/Rs16.75 to Rs16.60/Rs16.65; Omani riyal from Rs157.80/Rs158.15 to Rs157.15/Rs157.50 and Bahraini dinar from Rs160.90/Rs161.25 to Rs160.20/Rs160.50 for spot buying and selling.