Rupee sinks to 85.5 against dollar
KARACHI:
The rupee sank to a low of 85.45/65 against the dollar in the free market on Tuesday. Similar losses were posted in inter-bank trade as well with the rupee falling to 85.50/55.
Foreign currency dealers say that a daily increase in dollar demand has been witnessed on account of purchases from importers.
However, they do not foresee significant weakening of the local currency in coming days.
A dealer at a foreign bank said that, “demand for the dollar was pretty heavy today (Tuesday), which exceeded its supplies and so the rupee fell.”
But he added that, “it’s nothing to panic about, and the rupee is unlikely to start free-falling”.
Another dealer predicted that the rupee should maintain the current exchange rate “moving in the band of 85.35 and 85.70 against the US dollar.”
Analysts say payments for oil imports have caused the most recent round of depreciation in the local currency. However, they maintain that the country’s foreign reserves stand at over $15 billion right now, which is a comfortable cushion against import payments.
“At the current levels of foreign exchange reserves, the government can meet payment obligations against imports for up to five months,” said economist, Asad Farid. He said this should help stabilise the rupee against sudden depreciation in foreign currency markets.
Experts are predicting that the rupee could depreciate by another five per cent against the dollar by the end of 2010. Open market dealers are also in agreement with this forecast.
“The rupee is unlikely to strengthen too much but at the same time a sharp fall is also not expected,” said one such dealer.
Published in The Express Tribune, July 7th, 2010.
The rupee sank to a low of 85.45/65 against the dollar in the free market on Tuesday. Similar losses were posted in inter-bank trade as well with the rupee falling to 85.50/55.
Foreign currency dealers say that a daily increase in dollar demand has been witnessed on account of purchases from importers.
However, they do not foresee significant weakening of the local currency in coming days.
A dealer at a foreign bank said that, “demand for the dollar was pretty heavy today (Tuesday), which exceeded its supplies and so the rupee fell.”
But he added that, “it’s nothing to panic about, and the rupee is unlikely to start free-falling”.
Another dealer predicted that the rupee should maintain the current exchange rate “moving in the band of 85.35 and 85.70 against the US dollar.”
Analysts say payments for oil imports have caused the most recent round of depreciation in the local currency. However, they maintain that the country’s foreign reserves stand at over $15 billion right now, which is a comfortable cushion against import payments.
“At the current levels of foreign exchange reserves, the government can meet payment obligations against imports for up to five months,” said economist, Asad Farid. He said this should help stabilise the rupee against sudden depreciation in foreign currency markets.
Experts are predicting that the rupee could depreciate by another five per cent against the dollar by the end of 2010. Open market dealers are also in agreement with this forecast.
“The rupee is unlikely to strengthen too much but at the same time a sharp fall is also not expected,” said one such dealer.
Published in The Express Tribune, July 7th, 2010.