Despite efforts of the State Bank of Pakistan (SBP) and strong position of forex reserves, the greenback is out of control in the open market and stood at Rs 103.35 for selling. It appreciated 80 paisa in last one week.
“The dollar is being traded at Rs 103.85 or above Rs 104 in up country, including Peshawar and other cities situated near Afghan border areas,” said Malik Bostan, a currency dealer.
The central bank has allowed a long standing demand of Exchange Companies (A category) to import the dollar from Dubai and other neighbouring countries against other currencies (other than dollar), but it seems the greenback is once again out of control in Pakistan.
The market experts said the demand of the dollar has gone up only because of the Haj season as they are buying dollar for travelling expenses. The dollar rates in the Interbank market was Rs 101.50 for selling, which means the gap between Interbank market and kerb touch Rs 1.80 per dollar.
According to the sources, the banks were giving $5 million dollar to the exchange companies, while they are importing $2 million daily from abroad. Increasing import of Chinese products and additional advantage to China over Pakistan is also affecting dollar in the kerb market, they added.
“The demand of the dollar is also coming from the private sector,” Bostan said, adding “general people are also buying dollar from the open market.”
Since the imposition of withholding tax (WHT) on banking transactions, traders are protesting against WHT are buying dollars, he said adding that they are paying their bills through it and saving it in their bank lockers.
The analysts believed that the imports of the country including from China have gone up for last three months and the private sector is also making payments in US currency. They said some of the Chinese traders with Pakistani entrepreneurs are also exporting their goods to Europe and US markets and getting export rebates from Pakistan.
Mohammad Adil, analyst at a brokerage house, said a textile lobby is also trying to depreciate local currency to increase their profits in Pak rupee and are forcing the government to devalue the local currency to also make their products competitive in the global markets.
An official of NBP Exchange Company said, “the exchange rate is stable in inter-bank market for last few months, but despite the improvement in supply in open market the greenback is moving up.”
Earlier, the exchange companies had to surrender dollars to banks and used to receive in Pakistan but it was consuming time and creating hurdles in quick supply of greenback to open market.
The market experts said the exporters and other people are losing Rs 3 and above per dollar if they send their money through banking channels as the Western Union and other money senders deduct Rs 1.50 per dollar, while there is also a gap of Rs 1.80 in Pakistan. This will pave the way for remittances through non-banking channel allowing Hundi system to revive.
In fiscal year 2014-15, the country received $18.4 billion remittances. Higher premium could attract many overseas Pakistanis to get more local currency by sending dollars through Hundi system.