Banks moot on exchange rate issues called

The rupee strengthened against the US dollar, gaining Rs1.30 in the interbank market and Rs1.50 in the open market, following a renewed crackdown on currency smuggling. Bankers and currency dealers attributed the improvement largely to administrative measures rather than market fundamentals. The dollar fell in the interbank market from Rs284.80 to Rs283.50, while in the open market, it declined to Rs286.50. The crackdown was launched on July 23 in response to reports that US dollars were being smuggled to Afghanistan and Iran. “The crackdown has produced positive results, and more depreciation of the dollar is expected next week,” said Malik Bostan, President of the Forex Association of Pakistan. The State Bank of Pakistan (SBP) has called a meeting of bank representatives on Monday, although the agenda has not been made public. Some banking sources believe the central bank may instruct banks to bring down the dollar rate further, while others expect discussions on issues faced by importers.