No booking premium on dollar for one month

The US dollar is being booked without premium at least for one month in the interbank market reflecting an exchange rate stability amid fears that high inflows of export proceeds and remittances could further depreciate the greenback. “We have made deals. The buyers are booking dollars for one month without premium, which was unbelievable just 20 days back,” said Atif Ahmed, a currency dealer in the interbank market. He said the premium on six-month dollar buying has gone down by 50 per cent showing the declining confidence on the dollar against PKR. When the forward currency exchange rate happens to be higher than the spot rate, then the currency is said to be at a premium. Conversely, discounts occur when the spot rates are higher than the forward exchange rates. Hence, a negative premium is equal to a discount. The actual change in the exchange rate started emerging after the launch of a crackdown against the illegal business of foreign currency. It paid dividends as the grey market disappeared immediately while the dollar smuggling to Afghanistan and Iran was brought under control. This has impacted the dollar rate in the interbank market compelling the exporters to sell their holdings providing substantial liquidity in the banking market allowing the local currency to recover against the US dollar.