KARACHI Dec 08 (TNS): The market was caught off guard today after both the interbank and open market rates of the US dollar saw a substantial rise.
At the start of the day, the US dollar rate had increased by Rs4.5 in the interbank market and Rs1.5 in the open market.
However, the US dollar is trading at around Rs106.5 in the interbank market and between Rs107.8 and Rs108.8 in the open market.
A spokesperson for the State Bank of Pakistan (SBP) said that market forces set the rate of the dollar, after keeping in view the demand and supply.
He added that they are keeping an eye on the situation.
The spike in the dollar rate caught the market by surprise, especially since the SBP announced on Thursday that it had received $2.5 billion earned from the recent issuance of euro and sukuk bonds.
Last week, Pakistan raised $1 billion in a five-year Sukuk and $1.5 billion in ten-year Eurobond transactions.
Normally when supply increases, like it did yesterday, the market stabilises as the balance of payments increases.
However, analysts said that the current account deficit and related factors were building pressure on the economy which resulted in today’s incident.
Economist Muzammil Aslam told the dollar rate increase leads to a rise in prices of food items, petrol and services.
He said that a positive aspect of the increase in the dollar rate is that the country’s exports, which have dipped in the past several years, can increase along with the country’s industrial output.
Aslam also said that today’s move could also be a result of the delayed devaluation of the Pakistani Rupee, which has been delayed for over a year.
Moreover, on Thursday, the ongoing political uncertainty in the country took its toll on the Pakistan Stock Exchange, with the KSE-100 index falling more than 1,100 points.
Around 3pm on Thursday, the benchmark index was less than 38,770 points after a fall of more than 1,100 points.