KARACHI: The State Bank has expressed deep concern over the fast appreciation of dollar and asked the currency dealers to explain why the US currency crossed Rs104 in the open market, said dealers who attended a meeting of foreign exchange associations with the SBP officials on Friday.
The central bank was found extremely perturbed over the recent rise in the dollar rate despite the fact it had been providing additional support to the open market.
The dollar was kept under control in the inter-bank market while sudden demand pushed the dollar rate to as high as Rs104 in the open market. The inter-market traded dollar at Rs102.10 on Friday.
“We explained to the central bank that the situation changes before Haj. The fact is that it is still better than the last year Haj season,” said Malik Bostan, President Forex Association of Pakistan (FAP).
He said last year during this season the dollar appreciated by Rs4 from Rs98.50 to Rs102.50. Whereas currently the price increased from Rs103.20 to Rs104.
The State Bank has been expecting a decline in the dollar prices after allowing the currency dealers to bring dollars from Dubai to directly in their accounts. The facility has been provided for two months.
“We tried to convince the State Bank that the decision was taken rightly and timely, otherwise the dollar could have crossed Rs105,” said Zaffar Pracha, General Secretary Exchange Companies Association of Pakistan.
He said many Asian countries have recently devalued their currencies which developed an expectation in Pakistan that the rupee will also be devalued. “China, Japan, Indonesia, Malaysia and some Middle Eastern countries devalued their currencies,” said Pracha, adding this has resulted in higher investment in dollars in Pakistan.
The currency dealers while complaining against the unlicensed money changers and holding them responsible for dollar smuggling and higher dollar prices, said some 30,000 money changers should be stopped from doing business.
The State Bank asked the currency dealers to correct their faults, improve performance and come to explain their views in another meeting that could be possible in a week’s time.
The currency dealers were told to install biometric system at their branches and ask for a copy of CNIC from customers. The FAP said they will immediately install biometric system once the State Bank issues a circular for it.