KARACHI, May 24: The US dollar nosedived to Rs60.50 for spot selling in the open currency market on Friday as money changers responded to the State Bank call to stop speculation against the local currency.
The Forex Association of Pakistan said the US dollar finished at Rs60.40/Rs60.50 for spot buying and selling on Friday against the previous close of Rs61.10/Rs61.20.
Leading money changers said the dollar shed 70 paisa or more than one per cent against the rupee as speculators took to the sidelines after they got wind of the SBP warning against speculative buying. But Forex Association of Pakistan president Malik Bostan claimed he and his colleagues had supplied $10 million to selected money changers to stabilize the rupee. “We received $15 million supply from Dubai. We sent the bulk of it to Peshawar, Islamabad and Lahore and also used a small amount in Karachi,” he claimed.
On Thursday money changers in Peshawar, Islamabad and Lahore had literally run out of dollars and those operating in Karachi faced difficulty in meeting panic-driven demand for greenbacks.
Consequently, the dollar had shot up to Rs61.40 for selling in the kerb market before closing at Rs61.10/Rs61.20 for buying and selling, up 45 paisa from the previous close. The State Bank had taken serious note of it and, besides pumping in a few million dollars into the kerb market it had warned money changers to stop speculating against the rupee or be ready to face stern action.
The warning that came in the late afternoon remained well in circulation throughout the day on Friday, forcing speculators not to make more buying. What else helped the rupee to make a swift recovery was that the Karachi stock market saw a bull-run after remaining under the bears rule for a couple of days: The KSE 100 -share index rose by 135 points — the single largest gain in one session.
Money changers reports in Indian press quoting Prime Minister Vajpayee on the possibility of India delaying a war also reined in the galloping greenback.
“I can tell you the dollar will fall to Rs60.40 within a day or two because that is its real strength in the kerb market,” Malik Bostan told Dawn.
INTER-BANK: In inter-bank market the dollar finished trading at Rs60.07/Rs60.09 for ready buying and selling, up one paisa against the previous close of Rs60.06/Rs60.08.
Senior bankers said the rupee held firm despite a $12 million outflow from the system amidst no major inflows.
“The market was just calm. There was no major activity,” said a banker.