Speculation sparks heavy buying of dollars in open market

Rupee falls to Rs125.5 to US dollar before recovery

KARACHI: The rupee hit an all-time intra-day low of Rs125.50 to the US dollar in the open market on Thursday as speculation about further depreciation of the currency encouraged heavy buying of the greenback, currency dealers said.

The rupee, however, closed at Rs125 to the dollar for the second consecutive day.

“We started sales at Rs124.50 in the morning; this was the time when the number of sellers was higher than the buyers. Later on, the situation changed and the number of buyers eclipsed sellers sometime in the second half of the day,” a currency dealer at Dollareast Exchange Company told The Express Tribune.



The rupee-dollar exchange rate moved in the open market despite the fact that the level remained stable in the inter-bank market during the day.

The rupee closed at Rs121.46 to the US dollar in inter-bank trade on Wednesday. The State Bank of Pakistan (SBP), however, did not update the exchange rate till late in the night on Thursday.

Increased demand for dollars encouraged currency dealers to sell the greenback at a record price, widening the spread to a historic high of over Rs4 compared to inter-bank’s exchange rate on Wednesday.

The overheated situation prompted the Exchange Companies Association of Pakistan to cap the rupee-dollar rate at some suitable level to calm down things as the exchange rate largely remained stable in the inter-bank market throughout the day. “We have (voluntarily) decided to sell dollar at Rs124.50 in open market, subject to stability in inter-bank market,” ECAP General Secretary Zafar Paracha said.



“We are aiming to help the rupee appreciate to Rs122 to the US dollar in open market,” he said. This will reduce the spread to a normal level of Rs1.5-2.

Published in The Express Tribune, June 22^nd, 2018.

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