Rupee hits 104.7 in open market, recovers later

Exchange firms believe currency will regain lost ground soon.

KARACHI: The rupee continued its slide against the US dollar in the open market on Thursday and touched 104.70 during the day, but it recovered gradually and closed above that level, currency dealers say.

The reason why the rupee had been losing ground was not new and its roots went back to the market uncertainty during the days when Pakistan was negotiating a new loan programme with the International Monetary Fund (IMF), said Haji Haroon, President of Exchange Companies Association of Pakistan, while talking to The Express Tribune.

His association also met with officials of the State Bank of Pakistan on Thursday to discuss how to stop the rupee’s free fall in the open market.



Expressing optimism, Haroon, however, said exchange companies believed that the fast depreciation of the rupee against the US dollar could prove temporary and the rupee was expected to make a comeback and settle in the range of 102-103.

“We believe that the panic that led to the sharp fall of the rupee recently was temporary and the rupee will regain its lost ground in one or two days,” Haroon said.

“I hope the rupee will come back to 104 to a dollar on Friday and then further recover to 102 in the next few days,” he said.

In the interbank market, the rupee dropped to a record low, but its fall in the open market over the last few days was unprecedented.

When the rupee comes under pressure and loses value against the greenback, the difference between interbank and open market rates never exceeds Rs2 a dollar. However, in the past few days, this gap has widened to over Rs3.5, which was never seen in recent history.

In an attempt to tighten rules, the central bank issued a circular on Tuesday, asking the exchange companies to take identification proofs of buyers who purchase $2,500 or above, which triggered the rupee’s slide in the open market.

Published in The Express Tribune, July 26^th, 2013.

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