The rupee has managed to sustain its present levels versus the dollar amid several interventions by the State Bank of Pakistan (SBP) last week, experts observed, saying it seems the widening trade deficit might not allow the rupee to maintain its firmness versus the dollar. The rupee held its prevailing levels versus the dollar for buying and selling in the interbank market at Rs 61.35 and Rs 61.40, while in the open market, it lost 50 paisa in relation to the dollar for buying and selling at Rs 61.80 and Rs 61.90.
Versus the euro, the rupee lost sharply at 78.35 and Rs 78.65, dealers said.
They hoped that with the launching of 500 million dollars Islamic bond, and the increase in inflows of funds by the World Bank and the Asian Development Bank (ADB) might help the rupee resist a sharp fall against the dollar, and no large payments would also help in improving the value of the rupee versus the dollar, they added.
The market players exchanged views on the SBP Annual Report - 2003-04, and expected tough but positive indications amid growing trade imbalance, uncertain condition following the sharp rise in the world oil prices as well as the rising inflation rate in the country.
Commenting on the sharp increase in prices of essential items, SBP Governor Dr Ishrat Hussain said it would revisit the mark-up rates on the basis of the inflation figure in October.
Experts said that continued rising trend in the trade deficit casting a bearish pall on the dollar.
In the meantime, according to the fresh data of the SBP that it has raised the interest rates sharply on loans to curb the increase in the prices.
Since the new fiscal year started, the rupee was under pressure due to payments for costly oil imports, said the president, Forex Association of Pakistan (FAP), adding in fact, the basic factor of the rupee's fall was outflows were higher than inflows due to soaring oil prices in the world markets.
According to the Consumer Price Index (CPI) statistic, the first quarter of the fiscal year, the inflation has reached over nine percent.
The external payments were over seven billion dollars and some pre-payments during the current year put further pressure on the rupee, analysts said, adding the suspension of Saudi oil facility was also one of the factors behind the rupee's weakness.
Some money experts said the importers have no attraction in the dollar buying due to steep fall in the rupee's value versus the greenback despite this they were covering forward dollar buying to keep themselves away from future losses.
There was no confirmation about the amount, which the State Bank injected in the market last week, but some bankers said it had poured nearly 70-80 million dollars to lift the rupee.
As a result of several interventions by the SBP, according to the SBP weekly statements, the foreign exchange reserves declined to 9.94 billion dollars. This was second consecutive week for sliding trend in the reserves.
There are clear-cut indications that the SBP would intervene in case of volatility to keep rupee parity in a desired band there would not be any particular level to defend it.
Since the beginning of the current fiscal year, the rupee has lost more than five percent, dealers said, adding it fell so sharply mainly because of widening trade deficit.
According to the Federal Bureau of Statistics (FBS) data, the deficit widened to 839.25 million dollars in the first three months of the current fiscal year, nearly six times the deficit of 145 million dollars from the same period last year.
INTERBANK RATES: On Monday, the rupee was available at 61.30 and 61.60 per dollar in the interbank market for buying and selling, respectively.
On Tuesday, the rupee managed to recover some lost ground in terms of the dollar in the interbank market for buying and selling at Rs 61.10 and Rs 61.20, dealers said.
On Wednesday, it gained more five paisa against the dollar for buying at Rs 61.05 and rose by 10 paisa for selling at Rs 61.10.
On Thursday, the rupee lost its firmness losing 10 paisa for buying at Rs 61.15, and fell by 15 paisa on the selling counter at Rs 61.25 and Rs 61.10.
On Friday, it continued its overnight weakness, shedding 17 paisa for buying and selling at Rs 61.32 and Rs 61.35, respectively.
On Saturday, the rupee continued its slide versus the dollar, losing five paisa more for buying and selling at Rs 61.35 and Rs 61.40, respectively.
OPEN MARKET RATES: On October 25, the rupee was available at 61.30 and 61.50 per dollar, dealers said, adding On October 26, versus the euro, it lost Rs 1.15, and was available at 77.05 and 77.35.
On 27, the rupee held its prevailing levels at Rs 61.30 and Rs 61.40 in relation to the dollar. Versus the euro, the rupee extended its fall, shedding 55 paisa more for buying and selling at Rs 77.60 and Rs 77.90.
On October 28, it failed to show firmness, but lost 15 paisa versus the dollar for buying and selling at Rs 61.45 and Rs 61.55. Versus the euro, the rupee managed to gain 15 paisa for buying and selling at Rs 77.45 and Rs 77.75.
On October 29, the euro breached the 78 mark versus the rupee, gaining 50 paisa for buying and selling at Rs 78.25. It also lost 35 paisa versus the dollar at Rs 61.65 and Rs 61.75.
On October 30, the rupee continued its weakness and lost 15 paisa in relation to the dollar for buying and selling at Rs 61.80 and Rs 61.90. It followed suit, and lost 40 paisa in terms of the euro for buying and selling at Rs 78.35 and Rs 78.65.
The continued weakness in the rupee is indicating that it might cross the 62 barrier versus the dollar, dealers said.