In recent updates, the State Bank of Pakistan has observed a steady decline in the value of the US dollar against the rupee in both interbank and open markets. According to the State Bank of Pakistan, the US dollar’s closing price in the interbank market is reported at Rs277.62, reflecting a depreciation of 96 paise against the rupee. Meanwhile, in the open market, the dollar price is noted at Rs277, down from Rs278 the previous day, indicating a decline of Re1.
This consistent daily decline has become a common occurrence, affecting both banking and open markets. The open market appears to be flush with liquidity, which ultimately benefits banks by boosting their foreign exchange reserves.
When investigating the reasons behind this sustained decline, some bankers attribute it to the central bank, claiming that it sets the daily dollar rate for banks to adhere to. However, the State Bank of Pakistan offers a different perspective, emphasizing that the interbank currency trade is governed by a market-based exchange rate determined by supply and demand dynamics. SBP’s chief spokesman, Abid Qamar, stated, “The day-to-day decline in the dollar rate is simply the outcome of supply and demand of dollars in the interbank market.”
Despite the SBP’s stance, bankers continue to assert that the central bank is guiding this steady decline. They highlight the fact that the SBP has become the largest buyer in the banking market, acquiring foreign exchange through forward booking at slightly higher rates than the ready rate, even as the dollar’s value declines each day.
According to bankers, exporters have already sold their future dollars at ready or forward rates, with the two-month forward rate offering an additional Re1 per dollar compared to the ready rate, making it an attractive option for exporters as they witness a daily decrease in the exchange rate.
Currency dealers have also noted an increase of 5.3 percent in remittances in September, which is seen as a positive sign after a prolonged declining trend.