Higher foreign exchange reserves keeping it in check
The US dollar has dropped below Rs154 in the open market as the greenback shed Rs1.10 in two days. It stood at Rs155 on Wednesday.
BMA Capital’s Head of Research Faizan Ahmed says that current account balance figures are favorable and so are foreign exchange reserves, which is the reason behind stability in the dollar rate.
“I don’t see any reason for dollar rate to increase significantly,” he told SAMAA Digital. “On a short-term basis, I see dollar in the range of Rs150 and Rs155.”
Malik Bostan, the Forex Association of Pakistan chairperson, said that importers have been opening LCs (Letters of Credit) in haste, fearing a lockdown in the country. It has been the reason behind increase in dollar’s price after it recently fell to as low as Rs151.
Bostan explained that importers have started opening LCs, which they were supposed to open two months later, to import goods. An LC is the assurance by an importer’s bank to the bank of the seller abroad that a certain amount has been locked in their name. When the consignment arrives, the payment is released. It is basically a payment in transit.
“It may become difficult to open LC and import, if there’s a lockdown,” Bostan said. “And then if the lockdown begins internationally, the shipping lines will again choke and everything will come to a halt.”
But Zafar Paracha, the Exchange Companies of Pakistan secretary, said the recent hike in dollar’s value was only due to a correction. He expects the greenback to again stabilize around Rs153.