By Shahid Iqbal
KARACHI: The rupee fell to a record low against the dollar on Monday while it already lost almost Re1 since the private sector was given sole responsibility to pay the entire oil bills.
The dollar was traded at the maximum price of Rs84.57, which is the highest price dollar ever found in the local market, said currency traders adding that the dollar gained up to 20 paisa on Monday.
The currency dealers said the dollar was booked at Rs84.68 for Tuesday, which means the local currency would further lose its weight during the next session.
“The market was busy as buyers suddenly increased their demand and a bank bought half a million dollar apparently for foreign payments, which pushed the dollar price up,” said Atif Ahmed, a currency dealer.
The local currency has been losing fast against the dollar as the demand suddenly increased when the State Bank announced on Dec 5, that private sector would have to pay entire oil import bill.
Just before the SBP’s announcement, the dollar was traded at Rs83.70, which means during a month the local currency lost about 95 paisa.
The State Bank had announced that with effect from Dec 14, all purchases of foreign exchange related to import of crude oil would be made by banks from inter-bank market. The private sector is now solely responsible to import petroleum products.
The petroleum products are the largest single item in the import list of the country and it might range from $8 billion to $10 billion for the whole one year.
Currency dealers said the local market received negative reports as the oil price has increased to $80 per barrel in the international market creating fear among the importers that that the dollar might go appreciating if the oil prices kept going up.
“Despite good foreign exchange reserves of the country, the rupee is losing weight mainly because the importers fear that they might need more dollars to import oil and this is the reason for a rush to pick maximum dollars from the market,” said Atif.
The oil price touched $80 per barrel on Monday, while the prices could further escalate because of rising demand of energy in Europe and US due to record low temperatures during the current winter.
Analysts said that inflation was once again rising on account of government’s several moves to generate revenue through additional taxation on already loaded sectors.
“The government has increased oil prices, natural gas and electricity prices to sustain its falling revenue, which is falling because of poor economic growth,” said Abid Saleem, a brokerage house analyst.
He said the price hike of utilities will increase inflation, which just fell to half of what it was 12 months back.
“Under the rising inflation and poor economy, the currency has no place to stay firm. It will fall more in coming months,” said Abid.
Courtesy: Daily Dawn