KARACHI: The State Bank of Pakistan (SBP) has taken strict notice of the volatile exchange rate and warned banks to refrain from speculations and undue practices in the currency market or face stern action.
Sources told Business Recorder that SBP conducted a high-level meeting of heads of commercial banks on Thursday at SBP head office to review the ongoing developments in the currency market. The meeting was chaired by SBP Governor Dr. Reza Baqir. Reasons relating to a recent freefall in the exchange rate were discussed in detail.
During the meeting, the State Bank warned banks to refrain from exchange rate speculations and ensure fair dollar transactions in the interbank market.
Sources said that there were some reports that treasury departments of some banks are involved in the speculation of the dollar, of which the exchange rate is unstable in the currency market for the last few months.
With massive demand of greenbacks, Pak Rupee continued to depreciate against the dollar and closed at Rs 174.67 against the dollar in the interbank market and Rs 175.80 in the open currency market on Thursday.
The unnatural and frequent changes in exchange rate forced the SBP to conduct a meeting of the heads of the banks to discuss the current situation.
Sources said that during the meeting SBP has given a strong message to the commercial banks and Governor SBP Dr. Reza Baqir strictly asked the banks to avoid unfair practices in the currency market.
Governor expressed serious concern over the volatile exchange rate in the interbank market and asked banks to ensure that each transaction should be genuine and as per SBP’s directives.
The SBP advised the banks to discourage speculative dollar outflows from the official forex market and take all-out efforts to bring more inflows in the country. Baqir further said SBP is closely monitoring the exchange rate and transactions in the interbank market and strict action will be taken against the banks involved in the dollar speculations.
It was also discussed that the current account was negatively affected by recent increase of imports. It was informed that the relationship with the IMF is also getting better and positive news on the matter is expected shortly.
With Saudi Arabia funds for the support of forex reserves and deferred oil facility, Pak Rupee is likely to stabilize in the coming days.
The SBP also advised that the treasury departments must be given clear communication about the exchange rate stability to their customers and avoid panic buying to keep the exchange rate stable at a reasonable level.
Copyright Business Recorder, 2021