The ongoing floods of 2025 have exacerbated dollar shortage in Pakistan, intensifying concerns over hoarding of the greenback, foreign exchange dealers told Bloomberg.
As per the report, US dollars are not available at exchange outlets as “many branches and banks have suspended operations after being submerged,” due to floods, said Saleem Amjad, chief executive officer at Link International Exchange Co., one of Pakistan’s largest foreign exchange companies.
Flash floods have killed hundreds and displaced more than four million people in the South Asian country during the past two months
Bloomberg said that a prolonged US dollar shortage can halt a rally in the Pakistani rupee. “Dollar scarcity builds pressure on the local currency as importers and investors aggressively try to secure the greenback.”
“The shortage can also hinder imports and the government’s efforts to revive the economy ahead of an International Monetary Fund (IMF) loan review,” read the report.
“The floods could strain external balances, foreign exchange reserves and, hence, the rupee,” Bloomberg economist Ankur Shukla wrote in a note. A threat to shipments “could stress already-weak FX reserves that cover less than three months of imports.”
The rupee has risen 1.2% against the dollar since its low in July, following a scrutiny by law enforcement agencies, an upgrade by S&P Global Ratings and a trade deal with the US, Bloomberg noted.
The local currency’s strength is pushing some people to hold on to the greenback in anticipation of selling when the rupee gets weaker, Amjad said.
Meanwhile, Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan (ECAP), believed that the US dollar shortage is temporary and should ease within 10 to 15 days.
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