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Monday, October 3, 2022
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PKR loses Rs2.01 against dollar

The rupee began the week under pressure on Monday, losing Rs2.01 against the US dollar in the interbank market.

According to the State Bank of Pakistan, the local currency closed at Rs216.66 per dollar versus Friday’s closing rate of Rs214.65. FAP Chairman Malik Bostan said today’s fall in the value of the rupee came on the back of the recent decision to lift the ban on imports of luxury items coupled with pressure from exporters urging the government to keep the dollar rate around Rs216.

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“Commercial banks are also buying dollars at high rates, which is causing the greenback’s value to rise. The central bank must control commercial banks in this regard to halt the rise in the dollar’s value,” Bostan added. Komal Mansoor, head of Research at Tresmark, a web-based terminal for financial markets, said traders were worried not only about the policy rate announcement today but also about foreign exchange reserves, inflation and the local currency.

“Political noise is adding to their woes. RDA [Roshan Digital Account] inflows have slowed down, IMF inflow has largely been factored in and there is a long pipeline of imports (though they will be financed by inflows). Due to this, rupee may oscillate between 220-225 with temporary outruns on either side,” she said.

UAE dirham shortage hits Pakistan

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The open market is facing a shortage of UAE dirhams (AED) after the Gulf state made it mandatory for Pakistani travellers to declare 5,000 dirhams at the airport at the time of landing.

Pakistan’s currency market is falling short of the AED due to the latest development. This has also led to an increase in the price of the US dollar in the open market. After a long hiatus, the open market is running short on US dollars, which moved up the price as compared to the interbank rate of the greenback. President Exchange Companies Association of Pakistan (ECAP), Malik Bostan, told the publication that 21 flights from Pakistan land in Dubai each day, carrying a total of 4,200 Pakistanis per day who require about 21 million dirhams each day.

“The dirham is not available in the open market while the price has also gone up,” Bostan said, adding: “Those available foreign currencies are exported to Dubai to bring back an equal amount of US dollars.” “Higher dirham demand, in fact, created a shortage of dollars.” Bostan said a new regulation of the Civil Aviation Authority (CAA) for all passengers to declare cash and jewellery has added to this problem.

“Many people from the Middle East arrive with cash in riyals and dirhams. They also bring cash from their colleagues to directly hand it over to their families in Pakistan. Now, no Pakistani can take this risk,” he said. Due to these factors, currency dealers said the arrival of foreign currencies in the open market has dropped by almost $3 million per day.

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