KARACHI, Dec 26: Bankers said that the State Bank of Pakistan (SBP) has bought over $400 million from the market, which created excess liquidity. It is now being pumped out through T-bills and Open Market Operations, (OMOs).
They said that the SBP had to make huge payments like for Euro Bonds, which forced the SBP to buy dollars from the market as its own reserves have started melting for more than seven months because of widening trade deficit and problem in balance of payments. The SBP has been paying huge oil bills for more than a year. Since the beginning of the current fiscal year the country’s foreign exchange reserves witnessed an erosion of over $1.2 billion.
“SBP has bought substantial amount of dollars during a month but we can not say what exact figure is,” said a treasurer of a bank adding that the buying might be in the range of $300 to $400 million.
Brokers said that the SBP used to buy dollars to make payments due at the end of each calendar year. They said that buying was made through two foreign banks, but it has come to an end now.
“The dollar buying brings rupee liquidity in the market which was witnessed during a month and despite outflow of Rs68 billion through T-bills auction, the SBP was still busy sucking liquidity through the OMOs,” said a broker.
The SBP mopped up Rs20.5 billion in just two days as it raised Rs14 billion on Saturday and Rs6.5 billion on Monday. The rates were also under pressure as Rs14 billion were picked at a return rate of 7.64 per cent and Rs6.5 billion were raised at 7.55 per cent.
However, the dollar depreciated against the Pak rupee in the last four days and the currency dealers said that the outflow has stopped because of no buying by the SBP and a cautious approach by the importers.
They said the eight days holidays in the West, has practically created a dearth of dollars in the local market and the greenback slipped by at least 10 paisa in a week. On Monday the dollar was closed at Rs59.79 in the interbank market, while it was at Rs59.89, just four days ago.
The dealers said that the importers bought dollars in early days but now they have a feeling that the currency might further slip against Pak rupee which stopped them to take future positions.
Currency dealers also said that thousands of overseas Pakistanis have returned to Pakistan due to winter vacations in Europe and America. These Pakistanis, who would celebrate Eid al Azha next month, remitted millions of dollars into the country.
“We are receiving thousands of dollars each day, while the number of buyers is much lower than the sellers,” said Anwar Jamal of Glaxy International, an exchange company. He said that the ratio of selling and buying of dollars is 70:30.
The greenback also faced deprecation in the open market as it slipped below Rs60. The currency dealers said that the situation would prevail till the opening of Western markets after New Year.
