Currency shortage hits the free market – Business

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KARACHI: After a long period, the free market is running out of US dollars, which has increased the price against the interbank rate of the greenback.

The Forex Association of Pakistan reported that the dollar traded at an open market price of Rs218 on Saturday, while the interbank rate for the dollar was Rs214.65 on Friday. Banking markets are closed on Saturdays.

Forex traders said the latest development has created a shortage of foreign currencies, especially the UAE dirham, and exportable currencies have finally dwindled.

“Every Pakistani has to declare 5,000 dirhams at the UAE airport upon landing this week, which suddenly created a shortage,” said Malik Bostan, chairman of the forex association, adding that 21 flights from Pakistan land in Dubai every day, carrying a total of 4,200 Pakistanis daily.

Recently, Dubai authorities asked Pakistanis to have 5,000 dirhams when landing at Dubai airport. Calculations show that 4,200 Pakistanis need around 21 million dirhams every day to land in Dubai.

“The dirham is not available in the open market while the price has also increased,” he said, adding that these available foreign currencies are exported to Dubai to fetch an equal amount of US dollars. The rise in demand for dirhams has actually created a shortage of dollars.

Meanwhile, the new government ruling asks people to declare their money and other valuables upon departure and arrival.

Traders said declaring cash and valuables upon arrival in their own country makes no sense; in fact, it raised fears that declared cash and valuables would get them in trouble.

“Many people from the Middle East arrive with money in riyals and dirhams. They also bring money from their colleagues to give directly to their families in Pakistan. Now no Pakistani can take that risk,” Bostan said.

The inflow of foreign currency into the open market fell to a range of $1-2 million per day, when it was around $4 million per day.

Forex traders said the open market could experience more shortages in the coming days as exportable currencies declined.

Posted in Dawn, August 21, 2022

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