KARACHI: Political uncertainty mounted pressure on dollar buying as the US currency crossed the figure of Rs100 after four months on Wednesday.
The dollar was traded as high as Rs100.10 in the inter-bank market while its closing rate was Rs99.95.
The dollar had been trading below Rs100 since March. The open market also crossed the figure of Rs100.
On Monday, the dollar breached the red-line of Rs99 after 40 days, shocking the market.
The currency dealers argued that this was due to large payment of $147 million to IMF and about $100m for oil import.
The currency dealers were trying to hide the impact of tense political situation in Islamabad and Punjab but on Wednesday trading clearly reflected uncertainty brewing panic-like situation in the currency market.
“Apparently there is no shortage of dollar as reserves of both the State Bank and scheduled banks are comfortably high but panic gripped the market and dollar was not available which pushed the greenback to cross Rs100,” said Atif Ahmed, a currency dealer in the inter-bank.
Since the price was increasing, banks were avoiding selling their holdings depriving importers to make payments against their orders from abroad.
The dollar gained 65 to 70 paisa on Wednesday which was very high for the currency dealers to absorb this shock.
“I believe the market will remain bullish for dollar till mid of next week,” said Atif. The market will open on Friday which is the last working day while the Monday will face shortage since the New York remains close because of time difference.
“Traders feel the political situation may linger on for some time and this has forced importers to cut their exposure before it gets worse. Similarly, exporters are holding on their proceeds for as long as they can,” says Faisal Mamsa of Landmark Capital.
The open market also received the same pressure of uncertainty on political fronts.
“We sold dollar at Rs100.20 and bought at Rs99.80,” said Anwar Jamal, a currency dealer in open market. He said open market reflects inter-bank market behaviour.
“The rupee has done well not to collapse completely. The market needs some soothing news on the political front to calm its nerves, which doesn’t seem to be forthcoming at least for the next few days,” says Eman Khan of Aerari.
“The currency market is playing second fiddle to the political rivalry and will calm down as soon as tensions recede,” added Khan.