Fears grow over impact of cheaper dollar

The government does not like to see further devaluation of dollar against the rupee as it impacts both imports and exports, said currency dealers and experts in the interbank market. The dollar fell to a five-month low against the rupee, causing serious concerns for exporters. At the same time, the government fears that a cheaper dollar could lead to higher imports, which may disturb the current equilibrium between imports and exports. “The inflows are not very high, but the State Bank of Pakistan assures [there is] no excess dollar liquidity in the banking market. The higher dollar demand means no dollar devaluation, and the PKR remains cheaper for exporters,” said Atif Ahmed, a currency dealer in the banking market. The dollar fell to a five-month low against the rupee, reaching Rs278.77 on Friday, triggering fear among exporters. Exporters have a strong lobby in the power corridor, but their demand for cheaper energy was rejected by the IMF.