US dollar climbs to 108.50 against rupee in interbank market

The US dollar has climbed by three rupees in the interbank market, DawnNewsreported on Friday.

The dollar is currently being traded at Rs108.50 in the interbank market. It had closed at Rs105.50 in the interbank market on Thursday.

The pressure of payments on the external account is said to be the reason behind the rise in dollar's value.

State Bank of Pakistan spokesman Abid Qamar told DawnNews that they are monitoring the situation as the trading is currently underway and the bank would intervene if need be.
The spokesperson said they hope that the dollar rate would stabilise in a short while.

The situation in the interbank market has created a sense of nervousness in the open market, however.

President of Forex Association of Pakistan Malik Bostan said the value of dollar could rise significantly in the open market if the State Bank did not devise a clear policy in this regard.

The dollar is currently being traded at Rs109.50 in the open market. It had closed at Rs107.50 yesterday.

The development comes a day after a United Nations report warned that the government’s policy of keeping the exchange rate stable by intervening in the foreign exchange market may become unsustainable if the US dollar appreciates against most major currencies in global markets.

The stable exchange rate may be encouraging for some investors and traders, but the report warns that it is draining precious foreign exchange reserves.

“In these circumstances, if the US dollar appreciates against most major currencies in the global markets, the policy approach currently being pursued by Pakistan could become unsustainable,” it warns, raising the spectre of a forced devaluation at some point down the road.