Open market: US dollar regains some lost ground against rupee as foreign currency 'shortage persists'
- Currency dealers say greenback is still in short supply, 'quote' exchange rate in the range of 298-303
The US dollar regained some of its lost ground against the Pakistani rupee in the open market, as the shortage of foreign currency continued to keep the PKR under pressure.
On Friday, the US dollar was being "quoted" in the range of 298-303 against the rupee, as compared to 295-300 a day ago.
However, without a significant amount of volume and shortage of USD, the rates remained meaningless.
Multiple dealers Business Recorder reached out to said that the local currency is back under pressure amid a shortage of US dollars in the market.
A dealer, on condition of anonymity, said companies are only conducting trades on the volume of currency they receive that day.
"For example, a customer walks in and sells $500 at Rs295. We will sell those $500 for Rs298.
"Exchange companies that bought dollars at 305-310 are not going to sell them at 298 now. They will wait," the dealer told Business Recorder, explaining the shortage of supply.
Another research analyst said the fundamentals of Pakistan's economy have not changed.
“The exchange rate came down from 315 to below 300 after the announcement allowing banks to buy dollars from interbank for card-based transactions," Amreen Soorani, Head of Research at JS Global, told Business Recorder.
"However, pressures on the external side remain as the country's import cover still remains close to one month, while debt repayment schedule also remains hefty,” she said.
Similar sentiments were expressed by Arsalan Siddiqui, Head of Research at Optimus Research.
“There is no good news at the economic front, our foreign exchange reserves are dwindling, and the International Monetary Fund (IMF) remains delayed,” the expert told Business Recorder.
“Without the IMF programme, it is difficult to see stability in the currency market,” he added.
On Thursday, the Pakistani Rupee saw massive appreciation in the open market after the State Bank of Pakistan (SBP) allowed authorised dealers of foreign exchange to purchase US dollars from the inter-bank market for settlement of card-based cross-border transactions with International Payment Schemes (IPS).
Previously, as per the SBP directives, authorised dealers were allowed to purchase USD from any exchange company from settlement of card-based cross-border transactions with IPSs such as Visa, MasterCard, etc.
However, the SBP decided to allow the greenback purchase from inter-bank for such payments to facilitate customers who were seeing a wider gap between the two currency markets.
“In view of the representations received from stakeholders, it has been decided to allow authorized dealers (banks) to purchase USD from interbank for settlement of card-based cross border transactions with IPSs,” a circular issued by the SBP said.
Separately on Thursday, Exchange Companies of Pakistan (ECAP) Chairman Malik Muhammad Bostan also suggested early imposition of 10% tax on shopping abroad and on online shopping of luxury items through debit and credit cards.