KARACHI, May 21: The US dollar on Tuesday slipped below Rs60 in the inter-bank market as the banks remained calm despite a war -like situation prevailing across Pakistan-India border.

Bankers said the dollar closed at Rs59.98/Rs60 for ready buying and selling down ten paisa from the previous close of Rs60.08/Rs60.10.

“We purchased half a million dollars at Rs59.98 from a large local bank,” said treasurer of a foreign bank Nasim Akbar who is also chairman of Financial Market Association.

“The importers did not panic and the exporters dumped dollars into the market,” he said explaining the dramatic decline of the dollar. Some other bankers also confirmed that the greenback was sold below Rs60.

On Monday the dollar had lost four paisa against the rupee in the inter-bank market as the banks had remained calm on news of Indian attack on bordering areas of Pakistan.

On Tuesday too the banks refrained from getting panicky though the clouds of war thickened further with no sign of let-up in the Indian aggression.

“We should give full credit to the State Bank...in monitoring the exchange rate movements quite effectively,” said Nasim Akbar without elaborating.

Foreign exchange adviser of the State Bank Zafar M. Shaikh said “the SBP is determined to protect the real value of the rupee.”

Talking to Dawn over telephone, he said: “We will not allow anyone to speculate against the local currency.”

He said the dollar had come down on increased supply and lower demand and went on to say that the central bank was still buying dollar from banks to keep it from falling to “unmanageable lows”.

But some bankers said the most immediate reason for the fall of the dollar was that the central bank had warned some local and foreign banks on Tuesday that if they hoarded dollars they should not expect SBP to buy the same. He further said that there was not enough activity in the market on Tuesday as the banks had met the bulk of the dollar demand on Monday.

The chairman of Pakistan Commodity Importers Association Raees Ashraf Tarmohammad said it was true that the importers had not panicked on news of rising tension across Pak-India borders. But he said that most importers had ordered their foreign suppliers to delay shipments beyond June taking into consideration the exchange rate stability and anticipated changes in tariff in the next budget.

It is for the second time within a month that the dollar has slipped through the psychological barrier of Rs60: Earlier on April 23 also the dollar had sold for Rs59.99 in the inter-bank market. At that time the exporters had voiced their concern on why the central bank had let the dollar slip through the Rs60 barrier and immediately afterwards the greenback had begun to inch up.

On Tuesday again exporters said if the SBP stopped defending the dollar at Rs60 that would hurt the exports.

“The demand (for dollar) is not going to come as the imports have been on the decline...It is only the State Bank that can stop the fall of the dollar beyond a certain level,” said Vice Chairman of All Pakistan Textile Mills Association Mushtaq A. Vohra.

Talking to Dawn by telephone he said: “We can hardly afford to let the dollar fall below Rs60 as our power utility and labour cost has already gone up.” He said keeping the dollar at Rs60 is also necessary as India has started giving an industrialization rebate to its exporters that might leave Pakistani exporters less competitive in the world market. “Besides proposed opening of Pak -Afghan transit trade is also going to have an adverse impact on exports.”