| The rupee continued its upward trajectory on Tuesday against the dollar during morning trade in the interbank market, with analysts attributing the gains to an ongoing crackdown seeking to check illegal outflows of the greenback.
The dollar was changing hands for Rs299 in the interbank market at 10:10am, gaining Rs2.16, according to the Forex Association of Pakistan. It had closed at Rs301.16 on Monday.
In the open market, the greenback was being bought for Rs296 and sold at Rs299, according to the Exchange Companies Association of Pakistan.
“A flurry of administrative measures during the last two weeks had worked wonders for the market as the rupee grazed the 300 mark again,” said Komal Mansoor, the head of strategy of financial planning firm Tresmark.
“We also see a lot of verbal reinforcement of these measures,” she told Dawn.com. “ However, the market doesn’t expect sustained or significant gains and we may see the rupee consolidate around the 295 level in the near term.“
Mansoor added that whatever happens in the upcoming Monetary Policy Committee meeting on Sep 14 and the level of administrative supervision will be pivotal for the future course of the currency.
Currency dealers have reported that the open market is now flush with dollars and will sell more than $100 million to the banks this week, while they sold $20m in the last two days of the previous week.
Last week, caretaker Prime Minister Anwaarul Haq Kakar had said a crackdown to prevent cross-border smuggling was initiated across the country.
Likewise, interim Interior Minister Sarfraz Bugti had reiterated the caretaker government’s resolve on Sunday to take elements involved in smuggling and hoarding to task, including those accumulating dollars.
“We are announcing prize money for those people … who become our informants and tell us where smuggling and hoarding, [including] of dollars, is happening,” he had said during a press conference yesterday.
The interim government’s initiative was in line with Chief of Army Staff Gen Asim Munir’s assurance to the business community earlier this month of fostering transparency in dollar exchange and interbank rates.
Some currency dealers suggested that this situation could have happened earlier and could have saved the country from an extremely dry market. Before the crackdown against the grey market, the dollar in the open market had skyrocketed, reaching as high as Rs332, and it was even higher by Rs10 to Rs15 per dollar in the grey market. The surplus of dollars, which is being sold to banks, was, in fact, going to the grey market. The grey market had cost the country $8.2 billion in FY23, as remittances dropped by Rs4.2bn, and export proceeds fell by $4b.
The huge losses were borne by the country, but no efforts were made to stop massive smuggling and illegal trading of foreign currencies. Dollars were smuggled to Afghanistan, and huge payments in dollars were made against petroleum products being smuggled from Iran.
The caretaker government has arrested a large number of currency smugglers, and a list has been prepared to identify the people involved in the smuggling of oil from Iran. Outflows of dollars to both borders have been stopped, and the largest border with Afghanistan has been closed for the last four days.
More to follow Additional reporting by Shahid Iqbal |
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