KARACHI: The State Bank of Pakistan (SBP) on Friday warned exchange companies on ‘artificial shortage’ of the US currency that dropped rupee further to 104 against dollar amid a frenzy in the currency market.
“The artificial shortage of the US currency is a major source of concern,” Abid Qamar, the chief spokesperson of SBP told The News. “The State Bank is strictly monitoring the exchange rate movement in the open market and instructed the exchange companies’ heads that they should take necessary actions.”
Qamar said the central bank expressed its concerns over the falling rupee value in the open market despite that the bank has allowed exchange companies to import dollars to meet the growing demand for the greenback.
“(The central bank) has warned the exchange companies to make all-out efforts for curbing the US currency shortage in the market,” he added.
Qamar said recent move in the kerb dollar rate is really a source of worry for the central bank. “The rising supply-demand gap is a source of worry.”
The rupee hit 104 against the US currency on Friday at the open market as dollar shortages continued. It was quoted 103.50/103.70 against the greenback.
The rupee also breached its support level of 101 and closed at 102.02 versus dollar in the interbank market.
The rupee has depreciated 3.5 percent since August 2014. The [interest] spread on buying and selling of the dollar between interbank and open markets has widened to Rs2.
The State Bank has clearly instructed that the spread should not exceed 25 paisas.
Malik Bostan, President Forex Association of Pakistan said the open currency market was volatile due to rise in dollar demand from Hajj pilgrims and imposition of 0.3 percent withholding tax on banking transactions for non-filers, who are now trading in dollar to avoid the tax.
Hajj flights started from August 17 and will end next month. Therefore, Bostan said people have started buying dollar and Saudi Riyal for their journey.
Meanwhile, the head of the central bank’s foreign exchange department, in a meeting with the representatives of exchange companies, directed them to bring stability in the kerb market by ensuring smooth supply of the foreign currencies.
Bostan said the SBP ordered the exchange companies, during the meeting, to use biometric verification system in foreign exchange dealings for due diligence of the customer.
“The SBP said it would provide foreign exchange to the exchange companies to curb the shortage,” Bostan claimed.
“It was also suggested that companies would not sell or buy single dollar without providing the CNIC (computerised national identity card) from the customer.”