No let-up in rupee slide PDF Print E-mail
Written by Harris Badar   
Thursday, 09 October 2008

KARACHI: The rupee slid-down to a record low of Rs80.30 to US dollar in interbank market on Wednesday due to continued pressure from import payments amid multiple problems that shacking economic confidence.

Market sources said that after State Bank of Pakistan (SBP) intervention sentiments d ... KARACHI: The rupee slid-down to a record low of Rs80.30 to US dollar in interbank market on Wednesday due to continued pressure from import payments amid multiple problems that shacking economic confidence.

Market sources said that after State Bank of Pakistan (SBP) intervention sentiments driven forex market slightly calmed-down. However, SBP remained tight-lipped regarding fresh volume of dollars it sold in interbank market. Banking sources said that SBP might sell $100 million in interbank market, which helped rupee to recover some grounds before trade closed.

After depreciating almost 2 percent as compared to Rs78.69 on Tuesday rupee finally closed at Rs79.55 at buying and Rs79.65 on selling counters in interbank market. National currency has lost almost 23.3 percent so far this year.

The shortage of dollars in the kerb market was even more acute as the rupee-dollar exchange rates plunged to Rs80.30 at buying and Rs80.50 on selling before day trade closed.

In order to stabilize forex trade the central bank has been intervening in forex market periodically since last few months but failed to control steady fall in rupee amid insufficient forex reserves.

The State Bank, with less than $5 billion, has just enough foreign currency to cover two months of imports.

In a same move SBP in a meeting with heads of exchange companies on Wednesday advised them to ensure uninterrupted supply of cash foreign currency to their customers. Besides SBP also assured exchange companies of its support in case of any liquidity requirement.

The market remained under grip of rumours, however, SBP also categorically denied rumours regarding the freezing of foreign currency accounts and sealing of lockers at banks. In a bid to restore confidence, State Bank of Pakistan Governor Shamshad Akhtar said in a statement late on Tuesday that the country’s banking system was resilient enough to withstand market shocks and the adverse macroeconomic situation.

“There should not be any cause for concern about the stability of the banking system in the coming days,” she said, adding that capital adequacy was well above the minimum required.

Despite her reassurance, call rates went hit 38 percent on Wednesday, partly due to depositors’ withdrawals ahead of last week’s Eid ul-Fitr festival.

Dollar vanishes from Lahore: The US dollar disappeared in open market on Wednesday amid storm of rumours, our Lahore correspondent adds.

The greenback was in short supply in Lahore’s open currency market from the start of trading but was completely unavailable after rumours of financial institutions and country defaults.

The dollar opened Rs79.40 and 79.80 on buying and selling counters and continued to move upwards and finally closed at Rs80.00 and Rs80.50 on buying and selling counter after registering an increase of 70 and 85 paisa respectively.
 
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