KARACHI, March 15: The US dollar crossed the psychologically important barrier of Rs57.50 on Monday in the inter-bank market on increased demand for making government and corporate debt payments. Senior bankers said around $50 million outward payment was made on both accounts.

They said the greenback closed at Rs57.51 but they said in some deals the price of the greenback was quoted even higher. The rupee has lost 17 paisa against the dollar so far during this month falling Rs57.34 at the end of February to Rs57.51 on March 15.

Bankers say that the dollar has been on the rise on higher demand from importers who now feel that it would gain some strength in the days to come on growing trade deficit.

Prepayment of more than $1.1 billion foreign debt and the news that more prepayments would be made by the end of this fiscal year have also created pro-dollar sentiments. The $1.17 billion prepayment of expensive Asian Development Bank loans were in addition to the routine payments of government external debt.

"The dollar is gaining strength on these sentiments," said treasurer of a foreign bank. But this scenario relates to the second half of this fiscal year starting in January. In the first half ending in December 2003 the situation was different and the US dollar had lost 41 paisa to the rupee, coming down from Rs57.81 at end-June to Rs57.40 at end-December.

But now at its current value the US dollar is down only 30 paisa against the rupee in eight and a half months of this fiscal year falling from Rs57.81 at end-June 2003 to Rs57.51 on March 15, 2004.

In fiscal year July/June 2002/03 the US unit had fallen 3.7 per cent against the rupee. The current trend in exchange rates shows that during this fiscal year the dollar will either fall much lesser than it did in the last fiscal or it can even rise nominally.

In the last fiscal year the State Bank had continued mopping up excessive inflows of foreign exchange from the inter-bank market quite aggressively to manage rupee liquidity and to keep the dollar stable for the exporters.

But during this fiscal year the SBP has apparently lessened its dollar-buying from the market primarily because the level of inflow of excessive foreign exchange has decreased.

Fall in the current account surplus of the balance of payment does indicate that Pakistan has not getting as much net inflow of foreign exchange now as in the last fiscal year. In July 2003-January 2004 the current account surplus fell to $1.855 billion from $2.504 billion in a year-ago period.

Remittances from expatriate Pakistanis that form part of the current account also slipped to $2.256 billion from $2.533 billion during this period.

KERB MARKET: The US dollar has gained 15 paisa against the rupee also in the open currency market so far this month coming down to Rs57.75 for spot selling by money changers on March 15 from Rs57.60 at the start of the month.