Pakistani banks start charging dollar transactions at an open market rate
Dollars aren’t available in Pakistan due to a decline in export and a decline in remittances. Foreign exchange reserves are also not presenting a very promising look at the moment
By Chronicler
Islamabad
Pakistani banks have started charging dollar transactions at the open market rate which is determined by the demand and supply factor and the supply of the dollar stands at a minimal level against the demand for it.
The dollar rate in Pakistan has already hit the worst levels in the open market due to the scarcity of dollars, and this factor has become a real test for any person who wants to do an international transaction and he doesn’t have dollars in his pocket.
Market players charge exorbitant rates: The market players (individuals and banks) charge exorbitant rates against any transaction for which the dollar is required.
There seems to be no control over the dollar rate by the State Bank of Pakistan (SBP) as it has insufficient foreign exchange reserves to fulfill the demand for international transactions.
The foreign currency reserves are at a low ebb in Pakistan while foreign currency trading in Pakistan is also touching the lowest levels in terms of devaluation of local currency.
Banks charging open market rate: The banks are charging dollar transaction fees as per the open market rate which keeps fluctuating almost every hour of the day due to the scarcity of dollars in Pakistan.
The foreign exchange rates in Pakistan are exorbitant against any known solid foreign currency and specifically against the US dollar in the open market.
Rupee fluctuating at 250 to 270: The open market rate of the Pakistani rupee against the US dollar is fluctuating from Rs250 to Rs270, this is reliably learned. Meanwhile, the interbank rate is 229.25, and the officially open market rate is quoted at Rs236.75.
But these figures are all official who is not applicable practically when an international transaction is made through the banking channels.
The dollar rate in Pakistan isn’t determined by the central bank but by the real market forces, further learned.
The dollar transactions in Pakistan are sort of a free-fall phenomenon that determines the dollar exchange rate at the moment without the intervention of state-led forces.
Recently the SBP has been reiterating its stance that the Pakistani rupee is valued at 227-228 against the US dollar.
However, things are different in the open market, which is escalating at 265, and in some cases, it has already touched 275.
Those who have dollars aren’t ready to sell them on the assumption that the Pakistani rupee would further fall in its exchange rate versus the dollar.
Issue of dollar availability: According to some experts, when no dollars are available, and someone wants to buy them to do an international transaction, then officially quoted rates aren’t working.
The banks are charging the exorbitant exchange rate for a transaction against the dollar, and they are very high compared with the rates quoted by the central bank or the government itself.
No transaction is made on paper, so there is no record on paper of these transactions. The deal is made under the table, and on the papers, everything seems okay; it is learned.
While elaborating on the factors which have led to affairs like it, it is learned that foreign remittances have dropped to a great extent.
Moreover, there has also been a decline in exports from Pakistan, which are generally the main source to earn foreign exchange. The foreign exchange reserves have also been drastically dropping. These factors have pushed the dollar exchange rate against the Pakistani rupee to its lowest level.
Ends
