KARACHI: Amid a severe shortage of US dollars that plunged the rupee to its highest weekly drop since 1998, the State Bank of Pakistan (SBP) has discouraged interbank trading, Bloomberg reported, citing well-informed sources.
In order to control the free-fall of rupees against the US dollar, the central bank— with its limited power under the International Monetary Fund agreement — urged commercial banks to manage import payment requests from their own inflows, such as exporter accruals and remittances.
The sources, on the condition of anonymity, further told the publication that the banks were to seek permission from the monetary authority if they still needed to borrow. It should be noted that the SBP didn’t reply to an email seeking comment.
The Pakistani rupee fell nearly 8% last week — its biggest drop in more than two decades — as the country’s foreign exchange reserves stand below $10 billion and are only enough to cover less than two months of imports.
However, SBP Acting Governor Murtaza Syed told Bloomberg that Pakistan will comfortably meet its financing needs with an IMF bailout on track.
Citing sources, the publication reported that it was earlier noted that some commercial banks are seeking permission from the SBP and providing US dollars at a premium, which is raising costs for their clients.
Commercial banks provided dollars for energy companies at rates of Rs238 and Rs242 to a dollar on July 20, about 8% higher than the official closing rate for the day.
Moreover, banks that previously released overseas payments in a day are now taking more than a week, said Raheel Ahmed, chief executive officer at VN Lakhani and Co, a Karachi-based steel importer.
“Pakistan has seen dollar payment pressure because of energy payments,” Finance Minister Miftah Ismail said in a news briefing on July 21 in Islamabad. “The trend will reverse with there being more dollar supply than demand next month,” Ismail said.
