The Pakistani rupee took a sharp fall in value at the ‘open market’ on Friday, dropping by Rs4 in a single day to Rs226 against the US dollar. The spike in demand for foreign currency, to settle credit card payments and make import payments in informal markets beyond the borders, took a toll on the domestic currency.
The rupee maintained a steady downward trend on the third consecutive working day at the interbank market, shedding an additional 0.02% (of Rs0.05) to close at RS218.43 against the greenback.
Accordingly, the difference in value of the rupee widened by around Rs8 at the open market compared to the interbank markets.
Banks in Pakistan buy dollars from the open market to settle international payments made through credit cards.
Speaking to the Express Tribune, Malik Bostan, President of the Exchange Companies Association of Pakistan (ECAP) said, “Currency dealers have sold their dollars to the banks at Rs224 each today.”
“As the trend for online shopping and international travel continues to grow, the volume of foreign payments made via credit cards is also on the rise. Apart from that, the domestic currency came under immense pressure to settle import payments in Afghanistan and Iran,” he added.
Bostan added that “Pakistan has been importing coal from Afghanistan for quite a long time. It was decided that the payments against the imports will made in Pakistani rupees to Afghan traders. They, however, are no longer accepting Pakistani currency and are instead demanding payments in US dollars.”
Published in The Express Tribune, October 15th, 2022.
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