The rupee was not able to recover its lost ground versus dollar last week due to persistent demand for the US currency in the kerb market, money experts said.
However, the rupee gained three paisa in relation to the greenback for buying and selling at Rs 58.23 and Rs 57.25 in interbank market despite rising demand for dollars.
In the open market, the rupee shed three paisa versus the dollar for buying and selling at Rs 58.47 and Rs 58.52, respectively. It followed suit and lost 55 paisa in terms of euro for buying and selling at Rs 72.75 and Rs 73.05.
Market sources said that as a result of high payments the foreign exchange reserves fell last week.
According to the State Bank of Pakistan (SBP) weekly statement, country's foreign exchange reserves dropped to 12.203 billion dollars in the week ended on July 10, down 15 million dollars from previous week.
Marketmen were surprised over the rupee's trend and said that despite continued dollars' selling by banks on the directive of SBP the rupee could not come out of prevailing weakness to match the corporate demand.
Experts said that sharp increase in imports bill indicated that trade deficit was likely to swell further in the current fiscal year. Oil bills became very high as a result of steep rise in global markets, they added.
In order to deal with the unemployment problem in the country, the government is striving hard to set up new industries and revive the sick units to create job opportunities, they observed.
If remittances pick up from the present level, according to analysts, hard earning of overseas Pakistanis can enhance economic activities and can also create job opportunities in the country.
After narrowing gap between official and open market rates, analysts said, the remittances might show positive trend in future. They said that against the month of May, when the remittances were at 306 million dollars, in June 2004 it showed an improvement at 351.54 million dollars.
Rising inflation is inviting the government and the monetary team as well to study the present situation seriously to tackle the impact of the price hike, they said.
Last week inflation accelerated at the fastest rate in six years. The consumer price index (CPI) rose 8.45 percent over the year through June, and climbed 1.12 percent from May.
For the July-June fiscal year the CPI rose 4.57 percent, against a target of 4.2 percent and compared with a 3.10 percent rise for the previous fiscal year.
The sharp rise was seen in inflation as a result of rapid growth of the country's economy by 6.4 percent against the target of 5.3 percent and the other reason was the unusual rise in wheat prices.
The government must take effective measures to keep prices and currency circulation under control, analysts said. In the meantime, there were expectations that remittances might depict significant improvement in the coming days.
According to banking sources, the inflationary concerns are likely to keep the rates high and it is also expected that the State Bank might tighten its monetary policy slightly because of rising inflation. It is expected that the central bank will issue its monetary statement on July 20.
OPEN MARKET: On Monday, hectic dollar buying in interbank market dragged down the rupee value, losing five paisa for buying and selling at Rs 58.40 and Rs 58.50 for a dollar, dealers said.
But it seemed that the rupee might not face sharp erosion in the near future, they added. The rupee also extended its week-end fall versus euro, shedding 20 paisa for buying and selling at Rs 72.20 and Rs 72.50.
On Tuesday, the rupee shed five paisa in relation to dollar for buying and selling at Rs 58.45 and Rs 58.55, respectively.
The local currency, however, gained 25 paisa versus euro for buying and selling at Rs 71.95 and Rs 72.00.
On Wednesday, the rupee recovered five paisa in relation to dollar for buying and selling at Rs 58.40 and Rs 58.50. Versus the euro, the rupee lost 30 paisa for buying and selling at Rs 72.00 and Rs 72.30.
On Thursday, in line with interbank market trend, the rupee fell and lost five paisa in relation to greenback for buying and selling at Rs 58.45 and Rs 58.55, respectively.
The rupee, however, gained 10 paisa in relation to euro for buying and selling at Rs 71.90 and Rs 72.20 as the single European currency drifted lower versus dollar.
On Friday, the rupee moved both ways versus dollar losing two paisa at Rs 58.47 for buying and picking up three paisa for selling at Rs 58.52. The local currency, however, lost 20 paisa in relation to euro for buying and selling at Rs 72.10 and Rs 72.40.
On Saturday, the rupee held its overnight levels versus dollar. It, however, lost 65 paisa versus euro for buying and selling at Rs 72.75 and Rs 73.05.
INTERBANK RATES: On July 12, persistent demand for dollars for the last several weeks did not allow the rupee to expand its ground versus dollar in the interbank market for buying and selling at Rs 58.26 and Rs 58.28, respectively.
In the early session, the rupee touched the new high at Rs 58.34. Later, it trimmed its losses on dollars' selling intervention, currency analysts said.
On July 13, clearance of most of the major payments eased pressure over the rupee, recovering six paisa versus the dollar for buying and selling at Rs 58.20 and Rs 58.22, dealers said.
According to market sources, the banks have paid nearly 100-120 million dollars to the international companies and it is expected that after the payments of some remaining bills, the local currency might be able to recover its lost ground versus greenback, they said.
In the first month of the new fiscal year, Hub Power had to make about 45 million dollars debt payment to the international creditors.
On July 14, stability prevailed in the interbank market as the rupee held its overnight levels versus dollar for buying and selling at Rs 58.20 and Rs 58.22, respectively.
The market players were amazed over the present development in the market as some payments still have to be cleared. So, the market is continuously purchasing dollars to fulfil its requirements.
In fact, the forex market was somewhat nervous after inflation data, and ahead of next week's State Bank of Pakistan's monetary policy statement.
On Thursday, corporate demand and debt payments kept the rupee under pressure versus dollar for buying and selling at Rs 58.21 and Rs 58.23, dealers said.
Currency analysts said that the dollar is till up and the rates can go high if dollars' buying increased further.
On Friday, the rupee did not show major change in terms of dollar.
On Saturday, the rupee gave up its firmness against dollar, shedding two paisa for buying and selling at Rs 58.23 and Rs 58.25.
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