Pakistani currency on Friday made a significant recovery of around 1%, or Rs2.50, in open market, surging to Rs281.50 against the US dollar after the government banned over 200 goods under the Afghan transit trade (ATT) facility.
Those goods were being smuggled back into Pakistan, which led to the melting down of State Bank’s foreign exchange reserves and hurt domestic industries badly.
In inter-bank market, the rupee hit a new three-month high at slightly below Rs283 against the greenback. The recovery of the currency, however, slowed down as it gained less than Rs1 for the first time after several sessions.
Talking to The Express Tribune, Exchange Companies Association of Pakistan (ECAP) General Secretary Zafar Paracha said the authorities concerned seemed determined to let the currency “strengthen and reach its actual value in the range of Rs250-260/$ in both markets.”
According to State Bank of Pakistan’s data, the currency extended gains by 0.33%, or Rs0.93, and closed at Rs282.69 against the greenback in inter-bank market.
The rupee has gained more value in open market where it stood at Rs281.50/$ compared to Rs282.69/$ in inter-bank market, a situation seen after several sessions with the difference between two markets standing at negative Rs1.19 (or 0.42%).
ECAP’s Paracha said the rupee had gained notably in open market after the government banned the import of 212 items under ATT.
The smuggling of those goods was being financed through the illicit Hawala-Hundi operators and black markets instead of official channels, which ate into the country’s foreign exchange reserves. The elimination of black market has forced foreign currency sellers to turn towards open market, where supplies have increased and in comparison there are almost no buyers at currency counters.
“We (open market dealers) are selling $30-40 million a day in inter-bank market these days compared to less than $3-4 million about one month ago,” Paracha revealed.
Published in The Express Tribune, October 7th, 2023.
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