Debt repayment worries over Rupee recovers 35 paisa vs dollar
KARACHI, May 24: The nervousness over debt repayment to the IMF vanished from the inter-bank market on Thursday forcing the dollar to shed weight against the rupee.
The State Bank also announced fresh inflows of over $200 million which further elevated morale of the market.
Currency dealers said the dollar lost 35 paisa against the rupee in second half of the session on Thursday after setting record
against the local currency in the last three consecutive sessions.
The State Bank said foreign exchange reserves up by $207 million to $16.311 billion which pushed up holdings of the SBP by $152 million and that of commercial banks by $56 million.
These inflows were received from World Bank and Asian Development Bank as programme loans.
However, the huge debt repayments and widening trade deficit created a serious shortage of the US currency setting the dollar fly high.
“During the current fiscal year until May 18, Pakistan has made debt payments amounting to $2.53 billion (inclusive of $809 million to IMF) and other miscellaneous payments of $1.52 billion,” said SBP Chief Spokesman Syed Wasimuddin. It made the total as $4.05 billion.
The miscellaneous payments included commodity payments, haj payments and other official responsibilities. The SBP is set to pay about $394 to IMF in debt repayment on Friday.
The central bank said during the first 10 months of this fiscal year the country received a total $1.21 billion from the multilaterals and other sources (other than remittances).
The sudden rise in dollar prices was attributed to massive buying by two large private sector banks apparently on behalf of the State Bank but the central bank denied purchasing dollars from the market.
It has been a practice of SBP to buy dollars from market before payments or to maintain a reasonable size of foreign exchange reserves.
“The movement in exchange rate has been somewhat sentiment driven rather than any excessive demand and supply mismatches prevailing in the market,” said the SBP.
A currency dealer said since the payment to IMF was over, the dollar started sliding against the rupee and was hopeful to see downward trend on Friday.
“It is difficult to ensure that dollar will continue to slide in the absence of big buyers from the market but I am sure if it goes higher on Friday, it would not stop to set new records against the rupee,” said Atif Ahmed, a currency dealer.
The open market also witnessed a wild fluctuation as the dollar touched as high as Rs93.70-80 and finally it was traded at Rs93.30 on buying and Rs93.50 on selling.