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RECORDER REPORT
KARACHI (May 10 2008): Pak rupee strengthened by 20 paisas against the dollar due to intervention by the State Bank of Pakistan on the interbank market and stopping the exchange companies from sending cash abroad in pound sterling, euro and UAE Dirham on Friday.

At the opening PKR 68.45 was fetching one US dollar. Soon thereafter the rupee started strengthening to Rs 68.15 per dollar. However, aggressive import booking reversed the trend to weaken PKR to as low as 69.70/69.80 to a dollar.

After bank heads returned from a meeting with the SBP Governor, nearly all banks became dollar sellers with very few buyers. As a result the rupee gained to PKR 69.50 to dollar. But then heavy intervention by SBP through National Bank of Pakistan and Citibank strengthened the rupee further and a deal was reported at PKR 66 to a dollar. At the end the day for (Monday value) trades were conducted at PKR 68.25 to one US dollar.

On Friday six months forward cover premium rose from Rs 1.83 to Rs 2.05 with rumours that SBP may temporarily disallow forward bookings in order to curb excessive import booking. Further, the knowledgeable experts say that inflow and outflows based on SBP 'M' Forms for settlement do not take into account the forward bookings which are off-book transactions in banks and reflected in their nostros.

Exchange companies which were on sideline, on Friday, due to the sudden withdrawal of cash exports; were awaiting instructions from SBP regarding disposal of disallowed export currency.

Copyright Business Recorder, 2008