Exchange rates: Market speculation main force behind depreciation, say analysts
Dealers and analysts blame bankers, point to depreciation of interbank rate.
"I do not see any genuine reason of this depreciation of the rupee against the green back," Emerging Economics Research Managing Director, Muzammil Aslam.
KARACHI:
Currency dealers and analysts say that one of the reasons for the rapid depreciation of the rupee against the US dollar in recent days is speculation by the bankers, which is resulting in a faster depreciation of the rupee in the interbank market.
On Wednesday, the rupee showed a decline of over Re1 against the US dollar in the interbank market against the Tuesday’s closing interbank rates, closing at Rs107.30 against the Tuesday’s close of Rs106.10/106.20.
Speculations are rife that the interbank rupee rate is going to touch Rs108 or Rs109 against the dollar in a few days, currency dealers said.
“There is talk of rupee depreciation in the interbank market. And since there has been a gradual decline in rupee value for the last four to five days in the interbank market, this speculative news is gaining credibility in all circles,” said a leading money exchanger on condition of anonymity.
Dealers also say that the rupee has sharply depreciated because there is a strong demand for US dollars from people who are going on Hajj. But, they say that this dollar demand for Hajj season is going to reduce in the next one week.
Blaming everything on commercial banks, dealers say that the rupee is sharply losing 50 to 60 paisa’s against the dollar in the interbank market in the first two hours between every day. “And, this is happens even before the opening of the currency dealers in morning hours,” a dealer said.
Emerging Economics Research Managing Director, Muzammil Aslam, told The Express Tribune that the biggest reason for the rapid depreciation of the rupee is speculation in the market. Bankers and speculators know that the central bank is buying dollars to meet conditions set by the International Monetary Fund (IMF), he added.
“I do not see any genuine reason of this depreciation of the rupee against the green back. Pakistan is not paying any payment for oil and any other major imports. This is why I say banks and other speculators are indulging in speculation,” he said.
JS Global Capital Analyst Atif Zafar said that the central bank bought $125 million from the open market last month which had put pressure on the rupee in the market. Furthermore, it is very clear that the central bank is not intervening in the market to support the rupee against US dollar, which is helping the dollar appreciate in value, he added.
However, like currency dealers, Zafar also pointed towards the Hajj season for the unusually high dollar demand in the market.
Published in The Express Tribune, September 26th, 2013.
Currency dealers and analysts say that one of the reasons for the rapid depreciation of the rupee against the US dollar in recent days is speculation by the bankers, which is resulting in a faster depreciation of the rupee in the interbank market.
On Wednesday, the rupee showed a decline of over Re1 against the US dollar in the interbank market against the Tuesday’s closing interbank rates, closing at Rs107.30 against the Tuesday’s close of Rs106.10/106.20.
Speculations are rife that the interbank rupee rate is going to touch Rs108 or Rs109 against the dollar in a few days, currency dealers said.
“There is talk of rupee depreciation in the interbank market. And since there has been a gradual decline in rupee value for the last four to five days in the interbank market, this speculative news is gaining credibility in all circles,” said a leading money exchanger on condition of anonymity.
Dealers also say that the rupee has sharply depreciated because there is a strong demand for US dollars from people who are going on Hajj. But, they say that this dollar demand for Hajj season is going to reduce in the next one week.
Blaming everything on commercial banks, dealers say that the rupee is sharply losing 50 to 60 paisa’s against the dollar in the interbank market in the first two hours between every day. “And, this is happens even before the opening of the currency dealers in morning hours,” a dealer said.
Emerging Economics Research Managing Director, Muzammil Aslam, told The Express Tribune that the biggest reason for the rapid depreciation of the rupee is speculation in the market. Bankers and speculators know that the central bank is buying dollars to meet conditions set by the International Monetary Fund (IMF), he added.
“I do not see any genuine reason of this depreciation of the rupee against the green back. Pakistan is not paying any payment for oil and any other major imports. This is why I say banks and other speculators are indulging in speculation,” he said.
JS Global Capital Analyst Atif Zafar said that the central bank bought $125 million from the open market last month which had put pressure on the rupee in the market. Furthermore, it is very clear that the central bank is not intervening in the market to support the rupee against US dollar, which is helping the dollar appreciate in value, he added.
However, like currency dealers, Zafar also pointed towards the Hajj season for the unusually high dollar demand in the market.
Published in The Express Tribune, September 26th, 2013.