KARACHI - The dollar-rupee exchange rate is expected to swell to over 83 rupees soon as the State Bank will stop the supply of foreign exchange for the import of furnace oil from 1st February 2009, sources told The Nation on Wednesday. At present the dollar-rupee parity is hovering slightly below 79 rupees, but it would move upward from the day the central bank would give up foreign exchange supply for the imports of fuel oil, said sources. From February 01, 2009, the local foreign exchange market might become more volatile in the backdrop of SBP decision of shifting 25 per cent of oil payments to the interbank market which will weaken the value of rupee versus US dollar, said sources. Sources said that the dollar-rupee exchange would become more instable when the central bank would eliminate foreign exchange financing for the imports of diesel oil and other refined products by August 01, 2009. From Febr 01, 2010, the central bank would also stop the supply of forex for the import of crude oil. In addition to that, during the programme period, the SBP intends to eliminate any exchange restriction specifically; the exchange restriction on advance import payments against letters of credit will be eliminated by end-January 2010, subject to a marked improvement in the balance of payments position. Also, no intensification of existing restrictions and no new exchange restrictions or multiple currency practices will be introduced during the program period. It is worthwhile mentioning here that SBP had made public this directive just week ago this month which said that all purchases of foreign exchange related to the import of furnace oil will be made by the banks from the interbank market. It is important to mention here that currently all oil payments are being made directly through the central bank. Despite witnessing 5.4pc appreciation in the value of Pak rupee against US dollar this month on account of narrowing trade deficit and build-up of FX, it is likely to come under pressure by increasing price differential between these two trading currencies. According to daily forex report, on Wednesday the dollar-rupee exchange rate parity closed at Rs78.85 in the interbank market while traded at Rs 78.90 in the kerb dealings. The decline of the rupee value had been gathering pace since February 2008. Thus, in order to stabilize inflows and calm market sentiments SBP took number of measures early into FY09. These included suspension of forward booking of dollars, reduction in trading time and curtailment of advance payments against imports from 50 percent to 25 percent. Moreover, to ensure that export proceed are materialized timely, SBP issued instructions to exporters to submit their overdue export proceeds. In this regard banks were advised to launch a campaign for realization of overdue export bills. As a result, the stock of outstanding export bills held by exporters declined by $123m during Jul-Nov FY09. However, due to deteriorating fundamentals the depreciation of rupee accelerated. The rupee fell 16.3 percent during Jul-Oct FY09, reflecting the substantial loss of FX reserves, and heavy buying by business seeking to avoid exchange losses on imports. The speculations were strongest in Oct as a result rupee touched record lows of Rs. 83.46/US$ on Oct 17, 2008. The situation in the forex market improved only after Pakistan's entry into an IMF program, and a crackdown on exchange companies involved in smuggling on dollar. Consequently, Pak rupee recovered some of its earlier losses against the US dollar and registered a net depreciation of 13.3 percent for Jul-Nov FY09 period.