PKR slips by Rs1.22 in interbank

Web Desk (LTTN NEWS): On Thursday, the PKR continued to lose value. Analysts said that this was because there was more demand for dollars, especially from travelers going to the United Arab Emirates.

According to the Forex Association of Pakistan, the local currency had lost Rs1.22 on the interbank market by 1 pm and was being traded at Rs219.6 per dollar. Around the same time, the rupee was worth Rs228 per dollar on the open market.

The head of research at Tresmark, Komal Mansoor, said that the demand for dollars on the open market was “making a stir” in the interbank

“Higher import taxes and the new rule about carrying dirhams have caused a rush for dollars on the open market,” she said, referring to a new rule that Pakistanis traveling to the UAE must carry 5,000 dirhams with them.

She told traders to keep in mind that the rupee’s value would change after the Executive Board of the International Monetary Fund approved the loan tranche for Pakistan, which is expected to happen later this month.

Saad bin Naseer, the director of the web-based financial data and analytics portal Mettis Global, said that the rupee was unstable on the open market because tourists and students were exchanging their local currency for dollars at exchange counters.

Naseer said that demand for the dollar on the interbank market was stable because aggregate demand in the economy had slowed down. This meant that importers were not putting pressure on the greenback.

Zafar Paracha, General Secretary of the Exchange Companies Association of Pakistan (Ecap), didn’t agree with the idea that travelers buying foreign currency caused the rupee to drop.

“80% of the people who travel from Pakistan to the UAE do so to connect to other flights. They do not need that much money. Then, 18 percent of Pakistanis live there permanently, so they also don’t need 5,000 dirhams. It hasn’t caused more people to want dollars.”

He said that the lack of dollars was caused by two things: the government lifting the ban on the import of non-essential and luxury items and people sneaking dollars into Afghanistan.

“Exchange companies used to give up between $25 and $30 million on the interbank market, but now they only give up $2 to $3 million. The currency is being smuggled to Afghanistan because rates there are higher,” the currency dealer said.

Paracha said there was a “severe” lack of dollars and that the difference of Rs10–11 between the open market and the interbank market had “never been seen before.”

On July 28, the local currency hit a record low of Rs239.94. It then got better for 11 straight trading days, ending on August 16 at Rs213.90.

But on August 17, the rupee started falling again. Until August 24, it had lost Rs3.5 (yesterday).