KARACHI: The exchange rate witnessed massive fluctuations on
Friday as the dollar reached the intraday high of Rs109.50 in the
interbank market.
However, the State Bank of Pakistan
(SBP) said in a statement released in the evening that the movement in
the exchange rate was based on demand and supply of dollars in the
interbank market.
A few months back, the local currency
witnessed depreciation of up to three per cent in a single day.
Subsequently, the SBP came out with a statement that the exchange rate
was adjusted to create a balance in the market.
SBP says depreciation will contain imbalance in external account
The then finance minister did not approve of the move, and
the exchange rate went back to its pre-depreciation level in the
interbank market.
Meanwhile, an enquiry was also carried
out into the sudden adjustment. As for the latest movement in the
interbank market, the SBP said the adjustment was market driven and
based on supply and demand.
Surprisingly, the closing
rate provided by the SBP was higher than the market rate. Currency
dealers said the closing rate was between Rs106 and Rs106.50. However,
the SBP said the dollar closed at Rs107.
During the day,
the rupee depicted high and low of Rs109.50 and Rs105.55, respectively,
said the press release. The central bank said exports recorded
double-digit growth in July-October, foreign direct investment reached a
nine-year high and workers’ remittances posted a modest growth.
However, the continuation of high growth in imports led to the widening
of the current account deficit and, consequently, to the depletion of
foreign exchange reserves. “The pressures have persisted leading to the
adjustment in the interbank exchange rate,” said the SBP.
“The
SBP is of the view that this market-driven adjustment in the exchange
rate will contain the imbalance in the external account and sustain the
higher growth trajectory,” it added.
The SBP stated that
the exchange rate will continue to reflect demand and supply conditions,
adding that it stands to intervene in case speculative or monetary
pressures emerge.
Currency dealers were shocked during
the early session as the dollar rate increased sharply. Most of them
were clueless about the reason for the sudden jump in the rate as well
as dollar demand.
“The dollar rate kept rising and
reached as high as Rs109.50, creating panic in the market,” said a
banker who deals in the interbank market. He said the dollar started
slipping before the close of the first session in the afternoon.
“The
dollar adjusted to close at Rs106.50, which means importers who bought
the US currency at Rs109.50 booked a huge loss,” said the general
secretary of the Exchange Companies Association of Pakistan. He demanded
that an enquiry should be conducted to find out why importers were
forced to make a loss.