KARACHI: Exchange rate may witness another shock since it is being maintained at the current level artificially, according to currency dealers at the inter-bank market.
The inter-bank market witnessed devaluation of local currency against the US dollar after the first shock that depreciated rupee by 2.2 per cent in one go.
“As usual, third party is being used to influence the exchange rate and keep the dollar at Rs104. Few large banks have been restricted not to bid for more than Rs104.40, but pressure is mounting to break this barrier,” said Atif Ahmed, a currency dealer in the inter-bank market.
On Friday, dollar was traded as high as Rs104.47 while it closed at Rs104.45. It gained 6 paisas over the previous session.
Within two weeks, the dollar rose to the current level from Rs104.04, indicating pressure to push up its price.
“If dollar is allowed to float freely in the inter-bank, it may jump to Rs105 to Rs106 within no time,” said Atif.
He said the demand from importers was high despite no shortage of liquidity in the market. Importers were found in some panic, he added.
Currency experts said exporters got the benefit of rupee devaluation and they released the stuck up export proceeds.
They believe that gradual increase in dollar price on a daily basis will finally take the greenback to the height of Rs105-106, and it may take two to three months.
Foreign exchange reserves of the country are still at $18.5bn and remittances have been increasing, but weakness of economy has weakened the local currency, said an analyst.
The other reason of depreciation of the rupee is devaluation of regional currencies after a significant devaluation of Chinese yuan.
Gap in dollar prices at the open and inter-bank reduced significantly during the last couple of weeks.
The open market was charging more than Rs1 as against the inter-bank market. On Friday, the dollar was traded at Rs104.60-70, close to the inter-bank market rate.