Pakistan’s open market flooded with dollars due rapid devaluation
Amidst a rapid devaluation of the US dollar and mounting concerns regarding illicit dollar speculation, exchange firms have initiated the process of depositing their dollar reserves into the State Bank of Pakistan, as reported by ARY News on Thursday.
This move by exchange companies is primarily driven by their growing unease about the continued depreciation of the US dollar. Sources closely associated with this matter have revealed that these companies had initially accumulated dollar reserves, capitalizing on its recent surge in value against the Pakistani rupee. However, the decision to step up efforts against the black market is anticipated to exert further downward pressure on the dollar's worth.
Presently, exchange companies are acquiring dollars from the open market at a rate of Rs 305 per dollar, while exporters, motivated by profit, are grappling with unforeseen setbacks. It has been noted that the interim government's announcement of a crackdown on the smuggling of US dollars has led to a noticeable uptick in the number of dollar sellers in the open market.
As the nation's foreign reserves improve, there is a growing sense of optimism within the State Bank of Pakistan that the dollar's value might eventually dip below the Rs 300 mark.
In the Interbank market, the US dollar has witnessed a reduction of Rs 2.48, currently standing at Rs 304.50. Conversely, in the open market, its depreciation has been even more pronounced, with a decrease of Rs 4.00, bringing it to Rs 308. Zafar Paracha, in his statement, emphasized that exchange firms have initiated the sale of dollars to the State Bank of Pakistan as a direct response to the dollar's depreciation in the open market.
Consequently, the crackdown on illegal dollar trading has led to a decline in the demand for dollars, resulting in more sellers than buyers at exchange company counters.