KARACHI: The rupee will not depreciate against the US dollar any more, with the government making six major foreign payments last week, a State Bank of Pakistan (SBP) official said on Thursday.
"The government has no intentions of letting the rupee lose more value," SBP (Banking Policy and Regulations Group) Executive Director Syed Irfan Ali was quoted as saying in a statement.
The statement was released by the Pakistan Forex Association after the central bank official met a delegation of currency dealers.
“The rupee may go down at times when the demand for the dollars increases,” the official said.
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However, that would be a temporary phenomenon as the rupee would later recover against the dollar,” he added.
The six major payments include the one for imported crude oil that makes about one-fourth of the total import bill of an average $4.4 billion a month, forex association president Malik Bostan told The Express Tribune.
The government has allowed the local currency to depreciate by 1.8%, or Rs2.55, to Rs141.39 against the dollar in the inter-bank market in four weeks since March 8.
Cumulatively, the rupee has dropped 33.7% in a free-fall against the US dollar since December 2017.
Accordingly, the rupee fell to Rs143 against the greenback in the open market.
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The SBP official said the country was on the path of recovery, as the current account deficit is going to narrow down to $12 billion in comparison with $19 billion in FY18. “This will help in improving the balance of payment and ease pressure on the rupee in coming days,” he added.
Open market to limit sales
Bostan said the forex association had voluntarily decided to stop selling US dollar and other foreign currencies to hoarders and speculators to bring stability to the rupee in the open market.
"We will sell dollars to genuine buyers only," he added.
Currency dealers will sell dollars only to individuals who want to spend them on healthcare, education and foreign tours.
The buyers will have to submit documentary proof like fee vouchers of foreign educational institutes and hospital admission forms and visa if they are travelling abroad.
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The forex association president advised people to invest in property, stocks and other instruments instead of buying dollars or other foreign currencies.
He said the members of the association planned to meet soon in Lahore to implement the decision.
"The open market would continue to follow the inter-bank market, as the central bank has advised currency dealers to limit the spread between dollar prices in the two markets," he said. "We are selling dollars at a price one per cent higher than that in the inter-bank market."
Bostan said the demand for dollar shot up in the open market after Dr Ashfaque Hasan Khan, a member of the government’s economic team, said the rupee would fall to Rs150 against the dollar by June this year.