Dol­lar re­mains high de­spite cen­tral bank strict di­rec­tives

The Pak Banker - - FRONT PAGE - Muham­mad Yasir

Dol­lar re­mained high against Rupee at 103.90 in in­ter­bank mar­ket and 104.80 de­spite of strin­gent in­struc­tions of cen­tral bank to com­mer­cial banks to con­trol ex­ces­sive out­flows of for­eign ex­change through ev­ery pos­si­ble mea­sure, though bankers be­lieve that it will take a lit­tle more time to see im­prove­ment in the value of lo­cal cur­rency against green­back.

Sources in the bank­ing in­dus­try said the out­flow of dol­lars was seen sig­nif­i­cantly high up to twice of rou­tine from the start of the week on spike in de­mand in the bank­ing sec­tor and open mar­ket. High de­mand of Dol­lar was seen be­cause of im­ports of goods, con­ver­sion of Rupee de­posits into Dol­lar (Dol­lar­iza­tion), out­flow of for­eign in­vest­ment from stock ex­change and de­val­u­a­tion of re­gional cur­rency. The sit­u­a­tion is go­ing to be set­tled with the pas­sage of time once the mea­sure of the com­mer­cial bank be­comes ef­fec­tive on the sys­tem though ma­jor­ity of the bank­ing com­pa­nies are re­luc­tant to fol­low emer­gency steps.

The cen­tral bank di­rected banks to stop con­trol the ar­ti­fi­cial de­mand of Dol­lars in the in­ter­bank mar­ket with ur­gent mea­sures and mon­i­tor­ing and scru­tiny of its out­flows to sta­bi­lize its value against Rupee. How­ever, it did not is­sue any cir­cu­lar to avoid IMF ob­ser­va­tion which dis­cour­ages in­ter­ven­tion of cen­tral bank in the cur­rency mar­ket.

The cen­tral bank called upon an ex­tra­or­di­nary meet­ing with Pres­i­dent and CEOs of com­mer­cial banks a cou­ple of days ago which was chaired by Gover­nor SBP Ashraf Mehmood Wathra.

Sources in the bank­ing in­dus­try said banks were asked to charge up to 50 per­cent on cash mar­gins on Let­ter of Credit of lux­ury im­ported goods to slow down the de­mand of Dol­lars in the in­ter­bank mar­ket. They were asked to stop im­me­di­ately the for­ward book­ing of Dol­lars for in­def­i­nite pe­riod as a mat­ter of fact it con­trib­uted to de­pre­ci­a­tion of Rupee against Dol­lar which touched 17 month low level of more than 104.10.

The cen­tral bank di­rected top bankers to strengthen vig­i­lance sys­tem on the trade of the Dol­lars keep­ing well main­tain record of the im­porters and busi­ness­man in or­der to check any planned short­age of Dol­lars in the mar­ket.

It fur­ther di­rected banks to ex­pe­dite the process of Dol­lar in­flows from pro­ceeds of ex­ports, in­vest­ment and re­mit­tances for main­tain­ing and re­cov­er­ing the level of Rupee in com­ing days.

Bankers were asked to in­tro­duce new mech­a­nism on its own in­clud­ing es­tab­lish­ment of strict check on sys­tem re­lated to trade of Dol­lar in the in­ter­bank mar­ket. s

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