Dollar again touches Rs 106 as demand increases in KP and Balochistan

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The greenback once again shot up in the open currency market touching Rs 106 for buying and Rs 106.30 for selling as the Afghan government, through a notification, announced that there will be no trade in Pakistani currency, sources in the currency market said on Friday.

“The Afghan government issued a notification and stopped all kind of trade in Pakistani currency in the border areas of Afghanistan. The Afghan traders, therefore, are buying dollar from Khyber Pakhtunkhwa (KP) and Balochistan,” said Malik Bostan, President of Pakistan’s Forex Association and owner of Pakistan Currency Exchange. The hajj pilgrims are also picking dollars from the open currency market, he said.

Bostan said, “The Afghan government wants to destabilise the Pakistani currency, but our currency is strong because of the all-time high reserves.” The dollar is also stable in the market and will come down in about a week, he said, adding the country will also start receiving remittances of Eidul Azha from next week.

In a meeting on last Monday, the central bank had warned the open market currency dealers to reduce the difference between interbank and kerb markets as the greenback was being sold above Rs 106 and at that time the Afghan government hadn’t issued its notification yet. The State Bank has directed all the currency dealers to shrink the gap between interbank and kerb as the demand is not so high that the dollar should be sold at higher rates, said Exchange Companies Association of Pakistan (ECAP) Secretary Zafar Paracha.

Normally, people purchase dollars from the open currency markets to deal in small trade or hold it in their homes, said another currency dealer. “The demand of greenback is high in open currency market despite tight regulations of the State Bank,” he added.

The dollar is stable between Rs 104.55-65 in the interbank market for the last one year, said a treasury banker of a private bank. The banks easily disburse the payments of imports receipts including oil payments, which have been declined in the last eight months, he added.

The rupee has appreciated against the dollar in the interbank market and was traded at Rs 104.55-58 against the dollar on Friday, the official said.

The central bank is supporting the commercial banks in imports payments, in case they are short on dollars, but the supply of greenback is also normal in the interbank market, he added. The central bank has tightened the monitoring of US currency in Pakistan while it had stopped trading of Euro in Pakistan.

Sources in the kerb market said the currency dealers are not importing dollars as they should to meet the demand of local currency market and the dollar is short because of lack of interest from the currency dealers. The importers of greenback are depositing their dollars in the banks instead of selling them in the market.