LAHORE – The panic buying due to uncertainty following the Indian government’s currency demonetisation, continued to mount pressure on dollar buying as the US currency has crossed the figure of Rs108 just in a couple of weeks.
The dollar was traded as high as Rs104.5 in the inter-bank market while its closing rate in the open market was Rs108.65 on Tuesday. The dollar had been trading above Rs106 since December last year while open market even touched the figure of Rs109 – a difference of almost Rs4.
The currency dealers argued that this was due to panic buying following the Indian government’s currency demonetisation of large notes. The currency dealers were trying to hide the impact of tense panic buying but for the last two weeks, 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 of Pakistan and scheduled banks are comfortably high but panic gripped the market and dollar was short which pushed the greenback to cross Rs108,” said Forex Association of Pakistan president Malik Bostan.
Since the price was increasing, banks were avoiding selling their holdings depriving importers to make payments against their orders from abroad. The dollar gained more than two rupees in a couple of week which was very high for the currency dealers to absorb this shock. “I believe the market will turn bearish for dollar within two to three days,” said Bostan.
Meanwhile, the SBP governor also held a meeting with the Forex Association of Pakistan president and other currency dealers and expressed concerns over depreciation of rupee, particularly the widening gap of open market rate and inter-bank rate of dollar.
Bostan told the SBP governor that dollar demand has crossed 10 million against availability of 4 millions. He also said that banks are not paying dollars against workers’ remittances, resultantly dollar shortage has worsened. The SBP governor asked the dealers to directly get the greenback from the central bank on refusal from commercial banks.
He also ensured that the rate of dollar will go down to Rs106 within very short period. Other experts were of the view that the rupee is expected to remain under pressure for next week unless panic-buying does ease off by importers. “The importers fear that the rupee would lose further value against the dollar in the upcoming forex trade. This speculation is causing panic-buying by the importers,” an analyst said.