|
Dollars to start pouring in
soon: Pacts with donors
KARACHI, May 12: Agreements with multilateral donors will start
pouring dollars in a few weeks that will settle the supply-demand
dynamics in the market, said the State Bank of Pakistan on Monday.
SBP Governor Dr Shamshad Akhtar issued a statement which carries
central bank’s efforts to stabilise exchange rate, explaining its
position in the highly destabilised exchange rate scenario and
blaming the speculative forces for a steep fall of the rupee against
the US dollar.
The governor stressed that ‘we need fully to understand what is
really happening’ behind the volatility in exchange.
“The inter-bank and kerb markets’ behaviour has not been in line
with market fundamentals but reflects distortions created by trading
and speculative practices which often do creep in under
circumstances like this,” said the SBP governor. In discussions with
multilateral agencies and other sources, there is a broad agreement
for their support which should be able to bring in quick
disbursement of foreign exchange inflows,” said the SBP.
The government is looking at other options to attract foreign
inflows.
“We are optimistic that these inflows will start pouring in the next
few weeks which should settle the supply and demand dynamics more
sustainability in the markets,” the central bank said.
Pakistan is committed to exchange rate stability, said the SBP,
adding there is no doubt that demand pressures have been high in the
economy as manifested by the high fiscal and external current
account deficits.
Since Pakistan has a managed floating exchange rate regime, the
demand and supply of foreign currency sets the market exchange rate,
explained the SBP.
Over the last few weeks, there has been a slowdown in inflows
relative to outflows. Central bank has been supporting the oil
payments and other obligations of the government as well as
providing necessary support to the market as and when required. “The
central bank is not in businesses of distorting markets by setting
one level of exchange rate,” said the SBP, adding its interventions
have to be calibrated in line with the level of volatility.
The SBP came under severe criticism by the newly-elected government
and especially by the new high-ups in the ministry of finance
holding the central bank responsible for the current destabilisation
of exchange rate which eroded the rupee value against the greenback.
In just four months, rupee lost over 13 per cent value against the
dollar, making it more difficult for the country to borrow from
international market or purchase from the local market.
The country, which depends over 90 per cent on imported oil for its
energy resources, has been facing double negative impact of the oil
price-hike which reached $126 per barrel on Monday.
While the oil import bill soared to record high, the dollar itself
became an all time high against Pakistani rupee, thus forcing
Pakistan to borrow dollars, face record trade deficit and watch
helplessly the melting reserves of foreign exchange.
The SBP said it has been working closely with the government to set
in place a macroeconomic framework to ensure its sustainability.
“In addition, we are taking concrete steps to ensure effective
supply of foreign inflows.”
“We have been and are ready to supply the necessary liquidity and
lubrication to the markets through calibrated intervention,” said
the SBP.
“We have enhanced our vigilance of the inter-bank and kerb markets.
This vigilance is unearthing some issues which are being addressed,”
it added.
| |
|
|
