Dollar remains high despite central bank strict directives
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