Rupee fall reflects market conditions: SBP
KARACHI: In what seemed like a repeat of similar episodes in the past, the rupee saw a steep fall against the dollar as soon as foreign exchange markets opened on Thursday morning.
Read: US dollar touches all-time high at Rs146.25 in open market
“The exchange rate in the interbank market closed today at Rs146.52 per USD from yesterday’s close of Rs141.40,” the State Bank said in a brief statement sent out by its spokesman via an instant messaging platform after the close of trade later in the day.
“The dollar began climbing almost immediately as trading began,” one treasury head of a major bank, who did not wish to be named, told Dawn. “We called the State Bank to ask what is going on, and were told that today there is no set value for purchasing dollars. That’s when the steep falls began.”
Dollar surges to record high beyond Rs150 in open market, Rs146 in interbank; steep drop in rupee value comes a day after PM met currency dealers
He was referring to the silent directives the State Bank whispers to the banks, prohibiting them from transacting in the greenback beyond a specified price — the preferred tool of intervention for the central bank for a number of years now. Every devaluation over the past few years has followed the same pattern, where the State Bank withdraws the silent supports suddenly and tells the market to find its own price.
The steep drop of 3.6 per cent in the rupee value in a single day came a day after Prime Minister Imran Khan had held a meeting in Islamabad — in the presence of his financial adviser and the State Bank Governor — with a delegation of the Exchange Companies Association of Pakistan, asking them for ways to build foreign exchange supplies in the country to help reign in volatility, according to ECAP chairman Malik Bostan.
Read: PM forms body to control rupee devaluation
The open market has seen shortages of foreign exchange in some areas over the past few days.
Conflicting reports circulated about what happened at that meeting. According to sources in exchange companies, the ECAP attendees had been pressurised to bring the open market rate down to within a certain band of the interbank rate. As evidence they cite the fact that the open market rate fell by Rs2 immediately after the meeting ended, a fall described by some as a “forced rate”, and that the director general of FIA had been in attendance who pointed out certain activity by the dealers that could be described as illegal.