US dollar slips to one-month low below Rs112

Experts foresee dollar in range of Rs112-118 in inter-bank market by June


Salman Siddiqui March 15, 2018
Law enforcement agencies have caught a big group of currency smugglers along the Pakistan-Afghanistan border. Market players suggested that the group was carrying foreign currencies in the range of Rs900 million to Rs3 billion. PHOTO: REUTERS

KARACHI: The US dollar slipped to a one-month low, standing below the important level of Rs112 in the open market on Wednesday as it kept losing ground against world’s other major currencies which indirectly supported the rupee.

“The rupee recovered around Rs1 in the last one week to Rs111.90 against the US dollar (on Wednesday),” Exchange Companies Association of Pakistan General Secretary Zafar Paracha told The Express Tribune.

Forex Association of Pakistan President Malik Bostan said the change took place after the US dollar lost 2% against world’s major currencies like the euro and British pound last week.

The dollar had managed to stay above Rs112 for around a month. The current parity of Rs111.90 was last seen on February 22. It hit the all-time high of Rs113.05 on January 31.

Earlier, it stood around Rs107 for several months till mid-December 2017, according to forex.pk.

In the inter-bank market, the rupee remained stagnant at Rs110.57 to the US dollar on Wednesday. Experts foresee the dollar in the range of Rs112-118 in the inter-bank market by June 2018. Currency dealers did not rule out the possibility of a further downside of the US dollar against the rupee in the open market, but much would depend on the dollar’s movement against other major currencies.

The greenback may touch Rs111. “It will trade in the range of Rs111-112 in the short term (in the open market),” Bostan said, adding it seemed almost impossible that it would fall below Rs111.

He said the supply of dollars had increased in local markets in the wake of a strong recovery in the euro and British pound in recent days. “We are getting (comparatively) a higher number of dollars in exchange for the euro and pound (in Dubai),” he said.

He said Pakistan imports dollars from Dubai against export of other currencies, including the euro, pound and Saudi riyal. He said the current strength of the rupee was also supported by a notable drop in imports and recovery in exports in recent months. Earlier, the widening current account deficit and trade deficit had pushed the rupee down.

Paracha added the recent drop in the dollar value was also the outcome of a massive crackdown on smugglers in border areas.

Law enforcement agencies have caught a big group of currency smugglers along the Pakistan-Afghanistan border. Market players suggested that the group was carrying foreign currencies in the range of Rs900 million to Rs3 billion.

“This has badly hurt smugglers. Consequently, the demand for foreign currencies in the black market has gone down massively and that has supported the rupee,” he said.

“The demand for foreign currencies is four times higher in the illegal market compared to the legal (open) market,” he estimated.

Published in The Express Tribune, March 15th, 2018.

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