Continued volatility in currency market has forced the State Bank of Pakistan (SBP) to interact with exchange companies to keep the exchange rate stable. The SBP called an urgent meeting of Exchange Companies on Thursday to discuss exchange rate volatility. This was the second meeting with the exchange companies during this week on exchange rate issue, while one more will be held today (Friday) at SBP office.
After the meeting, Malik Muhammad Bostan, President Forex Association of Pakistan (FAP), said that the meeting was chaired by Syed Irfan Ali Executive Director Banking Policy Group SBP and attended by SBP and exchange companies representatives.
During the meeting, Executive Director State Bank expressed concern over the exchange rate volatility in open currency market and stated that there is no plan of further devaluation of Pak Rupee to the dollar and Pak Rupee will stable in coming day supported by increasing foreign inflows, Bostan added.
Irfan said that there were some massive external payments of which dollar rate was on surge in interbank market, however, in coming days it will decline. He also said that Pakistan's trade deficit has also reduced and may be about $12 billion with some $28 billion exports in the next fiscal year.
In addition, a number of friendly countries including Saudi Arabia, the UAE, Malaysia, Singapore, are planning massive investment in the next few years, he added. Executive Director SBP said that there is no justification of recent increase in US dollar rate and exchange companies should help keep the exchange rate stable.
Bostan told the meeting that exchange rate in free market is linked with interbank market and dollar rate will increase in open currency market unless it is not controlled in inter-bank market.
Secondly, the dollar is strengthening due to rumours of devaluation of rupee. Before the visit of an IMF delegation, exchange rate was Rs 138.50 to the dollar and after the visit it surged by Rs 3 to Rs 141.50 in open currency market due to higher demand and devaluation rumours.
He said that some government officials have also speculated that dollar could reach Rs 150 by June.
Bostan said that presently, people are holding back the dollars on rumours of further devaluation of Pak Rupee, while buyers are trying to purchase the US currency at relatively lower rates. About 20 percent customers are coming to market to sell while some 80 percent are to buy the greenback, he added.
He informed that export of permissible currencies is also on decline due to rising demand of Saudi riyal ahead of demand for Hajj and Umrah. He also mentioned that due to strict government policies non-filers have limited investment opportunities such dollars, gold and prize bonds.
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