By Mushfiq Ahmad
KARACHI: American dollar rose by 20 to 30 paisas against the rupee in the interbank market on Saturday in absence of export proceeds, said bankers.
The greenback closed at Rs 78.40 to Rs 78.50, as the market was uncertain about the volume of export proceeds available. It had closed at Rs 78.20 to Rs 78.30 before Eid.
“After holidays the market players are unaware of the export proceeds actually available in the market, so there is a little pressure on the domestic currency,” said a treasury official of a foreign bank.
He said the rupee lost value although there was little activity in the market. However, he said, the rupee is likely to improve its position from Monday. The dollar touched its highest level of Rs 78.80 in Ramadan. The foreign exchange reserves have been depleting for more than 11 months, and the current account deficit is also widening.
The country’s current account deficit widened by 64 percent to $2.5 billion during July-August of current fiscal year mainly due to slowdown in exports and rising trade deficit, besides slow foreign inflows. The government has been unable to arrange dollars to meet the rising trade deficit.
The rupee has depreciated against the dollar by more than 21 percent over the past 12 months and by more than 18 percent since February 18 this year.
Experts say that investment in euro and real estate in UAE along with political uncertainty has added to the external sector woes.
Meanwhile, the State Bank reported that the total liquid foreign reserves held by the country stood at $8.135 billion on September 27, 2008. Foreign reserves held by the State Bank of Pakistan stood at $4.685 billion. Net foreign reserves held by banks other than SBP stood at $3.449 billion.
Bankers said that reserves held by banks are rising mainly because more and more depositors are opting to keep their money in dollar to avoid losing their money’s worth at the hands of high inflation and falling value of rupee against dollar.
A banker said people might have been investing in dollar since the stock market was not performing well and there was hardly any chance of earning money by trading in shares these days.
A look at the foreign exchange reserves sheet posted by the State Bank on its website reveals that the foreign exchange reserves with banks have been rising since February this year while the reserves with the central bank continued to fall from their October 2007 peak of $16.486 billion.
Source: Daily Times, 5/10/2008