The dollar price in Pakistan has risen 20 paisas to reach its yearly-high of Rs166.60. On August 31 last year as well, this was the exact price of the dollar.
According to forex dealers, an increase in imports has raised the demand for the currency, increasing its price. The changes in Afghanistan’s political landscape has also impacted the dollar rates.
The dollar prices started to take off on August 24 when it rose by 90 paisas to reach Rs165.40 from Rs164.50. The very next day, a 40-paisa increase brought it to Rs165.80. This was followed by a 70-paisa rise to bring the price to Rs166.50 on August 25. In the next two days, there was another increase of 50 paisas. Thus, the dollar price saw a rise of Rs2.10 in just six days.
Forex association chairman Malik Bostan said the quantity of imports is rising and last month a 45% increase was recorded. He said the importers are buying the currency in high numbers nowadays. While the State Bank of Pakistan’s forex reserves are at an all-time high, most of these funds are for stand-by support, Bostan said. Therefore, he added, the inflow of the currency in the market is not enough to avoid the kind of rise it has seen in the recent days.
Due to the closure of money markets in Afghanistan, Bostan said, the war-torn country is also relying on Pakistan to meet its needs of some commodities.
In an attempt to fulfil this demand from across the border, many in Pakistan are importing goods to supply to Afghanistan, a situation that has contributed to the increase in dollar prices.
The currently unstable security situation in the country after recent blasts in its capital Kabul, has also made an impact on the rates. The banking system is also struggling in Afghanistan, while there are fears that Pakistan will have to face some security related challenges.
Forex dealer Zafar Paracha said one of the reasons behind the rise in dollar price is the smuggling of the currency across the border to Afghanistan.
Paracha says apart from smuggling, the government’s policy to allow travellers to carry $10,000, while crossing the border, is also becoming a burden for Pakistan. Bostan echoed Paracha’s views in this regard.
Traders working near the Pak-Afghan border in Peshawar and Chaman said smuggling of the currency is common. Transporters are used for smuggling and their vehicles have various compartments where currency is placed.
While this smuggling is done both ways across the border, currently the destination is mainly Afghanistan, due to the increased demand in the war-torn country.
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