Dollar rate spikes to 13-month high in Pakistan thumbnail

Dollar rate spikes to 13-month high in Pakistan

The dollar rate hit a 13-month high of Rs168.6 in the
open market according to the data released by the Forex Association.

The dollar rate rose by as much as Rs0.8 on Tuesday to push
it near a level last seen on August 6, 2020.

Analyst Raza Jafari told SAMAA Digital that during the month
of August imports increased, pushing the trade deficit to $4.2 billion – the
highest-ever level in the country’s history.

If imports continue to rise, domestic dollar reserves will
further fall, subsequently pushing the dollar rate up.

Jafari said that Pakistan had sufficient dollar reserves for
paying the import bills over the next three months but it also needed to take
steps to curb imports of luxury goods such as cars. The IMF’s program has also
been suspended for the past six months. If the IMF program resumes, there will
be some improvement in the exchange rates, he added.

Analyst Sharoon Ahmed said that Pakistan’s imports are
increasing rapidly because of which pressure on the dollar is increasing and
the rupee is depreciating.

Speculating on this issue, he said that it is possible that
Pakistan and IMF have reached an agreement and the international agency might
have asked Pakistani authorities to devalue the rupee.

He also said that an increase in the trade deficit could
also be a reason behind increase in dollar value.

Malik Bostan, the chairman of the Forex Association, said
that the United States had frozen several Afghan bank accounts since the
Taliban took over Afghanistan leading to large-scale smuggling of dollars from
Pakistan to Afghanistan. The price of dollar is constantly rising in Afghanistan
and people are buying dollars from Pakistan and selling them in Afghanistan to
earn a huge profit.

He said that the money market had also opened in Afghanistan and people were selling bonds to buy dollars. The demand for the US greenback is high there, he said.

According to him, businesses and universities in Afghanistan were starting to open. This, he said, had changed the unstable situation in Afghanistan and it would also have a positive impact on Pakistan.

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