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KARACHI: The State Bank on Thursday expressed serious concerns about banks’ speculation in the currency sector, saying they were involved in the multibillion rupee game.
Banking sources said that a high-level meeting, chaired by SBP Governor Dr Reza Baqir, and attended by the presidents of at least ten major banks, was held on Thursday at the Bank of ‘State.
The SBP governor expressed serious concern about the destabilization of the exchange rate and held bank treasurers responsible for speculative practices. The banks denied the allegation but assured the governor of their full support in keeping such activities under control in the future.
A sharp decline in the value of the rupee against the dollar not only destabilized the exchange rate, but also made it difficult for the central bank to deal with the situation with its own floating exchange rate mechanism.
Banks deny allegation, assure central bank full support
International currency watchers describe the rupee as the worst performer this year as the currency has fallen 13.4% against the dollar since the start of the current fiscal year.
Market sources say currency dealers in banks strike money with sharp fluctuations in rupee-dollar prices. Bankers deny such allegations, but experts who monitor the movement of currencies are sure the banks are involved.
In its bullish course this year, the dollar has faced a series of fluctuations, giving way to currency speculation.
The recent rise in the dollar has been attributed to several factors, including a trade deficit of $ 15 billion in the four months to October, an increase in the current account deficit that exceeded the annual target in the first quarter. ; and a change of government in Kabul that led to the smuggling of dollars across the border.
The protracted negotiations with the IMF for loans and the decline in Pakistan’s foreign exchange reserves were also cited as key factors in the depreciation of the rupee, leaving enough room for speculators.
On October 7, the State Bank imposed restrictions on the purchase of dollars on the open market, making biometric verification mandatory for anyone who purchases $ 500 or more.
As a result, trading in the open forex market has fallen to only 10% of the trade volume before biometric requirements.
The central bank also increased the cash reserve requirement, or CRR, for banks to 6pc from 5pc to reduce the liquidity that could be used for currency trading.
Currency traders said the results of Thursday’s banks meeting with the SBP governor would be reflected in future sessions, but they stressed that dollar purchases may not be reduced as imports are still in the pipeline. rise.
Posted in Dawn, le 19 November 2021
