KARACHI, Nov 17: The ongoing dispute over PTCL deal has impacted negatively on rupee-dollar parity as the shortage of dollars compelled the State Bank to pick up the greenback from the market for several payments which it held in the hope of receiving a large amount of dollars in the wake of maturity of the deal.
Market sources said the State Bank was vigorously buying dollars from the market for the last one week that pushed the dollar rates up against the Pakistani rupee in both inter-bank and open markets.
Etisalat has to pay $2.598 billion against the purchase of a 26 per cent stake in PTCL but failed to make payments, and despite continued efforts by the government the deal is still far from the completion.
“Despite all efforts by the SBP to keep dollar prices cool, the rates have surged from Rs59.76 to Rs59.87. It can not be controlled even if the SBP keeps buying heavily,” said a currency broker at the inter-bank market.
In the open market, the US currency once again crossed the Rs60 mark and was traded at Rs60 to Rs60.05.
Banking sources said the SBP had delayed its several payments to be paid in the foreign exchange, awaiting the inflow of dollars in the wake of PTCL privatization. “High oil and other delayed payments are now posing a threat to the hard earned foreign exchange reserves already depleting since April 2005,” said a banker.
The country’s reserves in April 2005 stood at $13 billion, which decreased by $1.320 billion to $11.680 billion by the middle of this month. Widening trade deficit and negative balance of payment accounts have created serious problems for the country to maintain the reserves above $12 billion.
The import bill is on the rise and the current account deficit rose to $1.4 billion in the first quarter of the current fiscal year. Brokers said this was alarming. If current account imbalances keep moving with the same pace, the deficit might touch over $6 billion by the end of the fiscal year in June 2006.
“This deficit, if touched $6 billion, would put enormous pressure on the exchange rate and the rupee would certainly lose it charm at the end,” said another banker.
The real pressure on reserves came after the world oil prices touched record highs up to $70 per barrel. The SBP had started paying all oil bills from the second quarter of the last year.
Currency brokers said there was a dearth of the dollar in the market because of higher demand. They said importers had also geared up to get maximum dollars, fearing that the rates would further go up.
“These days it is difficult for the importers to find a big amount of dollars as banks avoid arranging such deals because they have to prove the SBP that the buyers ere real importers,” said a currency broker.
The brokers said the real price could be higher than Rs59.90, but the SBP’s swap mechanism succeeded in putting pressure on the greenback. They say the SBP buys and sells at the same time to keep a control over the price fluctuations in its own favour.
Bankers said during Ramazan, dollar prices were kept lower as higher inflows from abroad increased supply of the US currency. The higher supply brought down the prices in the open market to below Rs60 after a long time.
