Rupee tumbles to record low
Pakistani rupee fell to a record low of Rs85.85 against the US dollar during inter-bank trade on Monday.
KARACHI:
The Pakistani rupee fell to a record low of Rs85.85 against the US dollar during inter-bank trade on Monday.
Dealers at local banks confirmed that the local currency fell as low as Rs85.90 against the greenback during the day’s trade. Despite recovering slightly at the end of the day, the rupee still remained at its lowest exchange rate against the dollar.
“The supply of dollars was extremely limited due to the closure of markets in New York,” commented a dealer at a local bank. “On the demand side, heightened activity was witnessed due to import payments,” he added.
Experts explained that payments for oil shipments to the country and for imports fuelled demand for the US dollar.
Despite the depreciation of the local currency during inter-bank trade, open market exchange rates held firm on Monday. A single US dollar fetched Rs85.25 at the end of the day’s trade while the opposite transaction was executed at a rate of Rs85.70.
The local currency hit its previous lowest exchange rate against the greenback on August 2 when the US dollar fetched Rs85.81.
Experts contend that the exchange rate would stabilise in the next few days. “Deteriorating economic conditions will continue to pressure the local currency,” commented an analyst, but he added that the “rupee should be stable at just under 86 at least until after Eid holidays.”
Exchanges feel crunch
The supply of dollars was limited on Monday due to the closure of American markets for Labour Day. Local foreign exchange dealers highlighted that once markets re-open on Wednesday, the supply of greenbacks will stabilise.
“Remittances sent to the country by Pakistanis working abroad have increased by 30 per cent as compared to the same pre-Eid period last year,” Pakistan Forex Dealers Association President Malik Bostan told The Express Tribune.
He added that the increase had put pressure on local dealers since banks were largely unable to fulfil demand for foreign currency. Many foreign exchange dealers closed shop before the end of the business day since they ran out of foreign currency, especially dollars.
Malik explained that “demand in the open market for foreign exchange usually shoots up before Eid.” But he added that “the closure of US markets had added to the crunch this year.”
Dealers expect that the supply of dollars will improve once US markets re-open on Wednesday.
SBP injects fresh liquidity
In the money market, overnight rates ended between 12.50 and 12.75 per cent, compared with Friday’s close of 12.90 per cent. The State Bank of Pakistan injected Rs19.85 billion ($231.2 million) worth of government paper in a reverse-repo auction. Dealers said the next scheduled outflow of Rs66.25 billion was due on Thursday.
Published in The Express Tribune, September 7th, 2010.
The Pakistani rupee fell to a record low of Rs85.85 against the US dollar during inter-bank trade on Monday.
Dealers at local banks confirmed that the local currency fell as low as Rs85.90 against the greenback during the day’s trade. Despite recovering slightly at the end of the day, the rupee still remained at its lowest exchange rate against the dollar.
“The supply of dollars was extremely limited due to the closure of markets in New York,” commented a dealer at a local bank. “On the demand side, heightened activity was witnessed due to import payments,” he added.
Experts explained that payments for oil shipments to the country and for imports fuelled demand for the US dollar.
Despite the depreciation of the local currency during inter-bank trade, open market exchange rates held firm on Monday. A single US dollar fetched Rs85.25 at the end of the day’s trade while the opposite transaction was executed at a rate of Rs85.70.
The local currency hit its previous lowest exchange rate against the greenback on August 2 when the US dollar fetched Rs85.81.
Experts contend that the exchange rate would stabilise in the next few days. “Deteriorating economic conditions will continue to pressure the local currency,” commented an analyst, but he added that the “rupee should be stable at just under 86 at least until after Eid holidays.”
Exchanges feel crunch
The supply of dollars was limited on Monday due to the closure of American markets for Labour Day. Local foreign exchange dealers highlighted that once markets re-open on Wednesday, the supply of greenbacks will stabilise.
“Remittances sent to the country by Pakistanis working abroad have increased by 30 per cent as compared to the same pre-Eid period last year,” Pakistan Forex Dealers Association President Malik Bostan told The Express Tribune.
He added that the increase had put pressure on local dealers since banks were largely unable to fulfil demand for foreign currency. Many foreign exchange dealers closed shop before the end of the business day since they ran out of foreign currency, especially dollars.
Malik explained that “demand in the open market for foreign exchange usually shoots up before Eid.” But he added that “the closure of US markets had added to the crunch this year.”
Dealers expect that the supply of dollars will improve once US markets re-open on Wednesday.
SBP injects fresh liquidity
In the money market, overnight rates ended between 12.50 and 12.75 per cent, compared with Friday’s close of 12.90 per cent. The State Bank of Pakistan injected Rs19.85 billion ($231.2 million) worth of government paper in a reverse-repo auction. Dealers said the next scheduled outflow of Rs66.25 billion was due on Thursday.
Published in The Express Tribune, September 7th, 2010.