KARACHI: The dollarisation of economy has become more acute as the greenback’s shortage pushed its price unexpectedly beyond the market expectations.
Bankers said the State Bank has been using pressure to stop the currency dealers from crossing the red line of Rs105. Currency dealers made deals as high as Rs104.97 on Tuesday.
“The dollar may go well beyond the red line of Rs105 if the State Bank stops influencing the market,” said Atif Ahmed, a currency dealer in the inter-bank market.
Bankers said the currency dealers were afraid of making deals for dollar trading in the inter-bank market which prevented them to remain below Rs105.
“We don’t know how long this situation will last but it seems that after the government’s deal with the IMF which is expected this week, there could be stability in the exchange rate regime,” said another currency dealer.
However, most of the bankers dealing the currency markets said the main cause of concern was the shortage of dollars.
They said almost all banks have no currency in their foreign accounts and the payments are made through buying from the local markets. It has created additional pressure on price and demand for the greenback.
A senior currency dealer said that when the dollar reached 103 against the rupee, it was left over the market to settle the exchange rate. But it suddenly rose, breaching all hopes for stability.
“There is no backing or coverage for the dollar price while an acute shortage dominates the market. It means the dollar will shoot up once it goes free from the influence of the State Bank,” he said.
He said the central bank did not have enough reserves to influence the market with the higher supply of the dollars. “There’s no official or written instruction from the SBP for the currency dealers but the hidden threat is there to stop dealers from going ahead for higher price.”
The open market is close to the rate of the inter-bank market with a differential of not more than 50 paisa and exchange companies are not providing more than $1,000. For higher amount, the buyer has to wait for at least one or two days.
It has been witnessed that buying dollars from the open market is not easy these days as sellers, even smaller ones, are bargaining for higher price.
