Rupee continues to lose ground, falls to 233 in interbank

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The rupee continued to lose its value on Tuesday and fell to a new low of 233 against the dollar in the interbank market.

The local currency, which had closed at Rs229.88 yesterday, fell Rs3.12 to Rs233 by 12:33pm, according to the Foreign Exchange Association of Pakistan.

Mettis Global Director Saad Bin Naseer said the rupee hit a new intraday low due to letter of credit (LC) payments for oil at a time when the State Bank of Pakistan (SBP) was reluctant to release reserves to contain the exchange rate volatility.

“Furthermore, exporters seem more interested in earning windfall profits as they seem to have abandoned national interest in view of gaining quick earnings from rupee depreciation,” he told Dawn.com.

On the other hand, Naseer pointed out, exporters were utilising maximum LC limits from banks.

“Any bank will tell you that exporters are currently using maximum limits for import LCs whereas they refuse to bring in dollar from export earnings.”

He said that the only way for the government to address the situation was to mandate exporters to convert dollar earnings into rupee immediately.

“At the same time, the SBP can serve as an intermediary by doing swaps with banks so that the exchange rate can remain insulated from foul play of exporters at a time of crisis.”

He said that exporters should focus on earning from the sale of their goods instead of fleecing the exchange rate.