A currency dealer counts rupees and dollars at a currency exchange.—AFP file photo
A currency dealer counts rupees and dollars at a currency exchange.—AFP file photo

KARACHI: There is a rapid increase in dollar smuggling from Pakistan to Afghanistan during the last couple of months which resulted in pushing up the greenback price and demand in Peshawar compared to other parts of the country, said currency dealers.

The government has announced to send Afghans, who have been living in Pakistan for over three decades, back to their motherland by end of this year. Going back to their country they are selling their businesses and properties and buying dollars.The repatriation of Afghans has affected both the dollar and property prices in Peshawar. Currency dealers said thousands of Afghans have established business and acquired properties in posh localities of Khyber Pakhtunkhwa’s capital and other parts of the province.

“The strong demand for dollars in Peshawar has pushed up its price 50 paisas to Re1 than the rates available in Karachi,” said Exchange Companies Association of Pakistan (ECAP) Secretary-General Zafar Paracha. “Afghans are buying dollars from the open market. It is illegal to take out millions of dollars from Pakistan; banks don’t provide dollars to the repatriating Afghans.”

The currency dealers anticipate that the demand for the US currency could remain high in the coming months as there isn’t any final deadline announced for completing the process of sending them back because the number of Afghans living in the country is also not known.

“One of the reasons for high dollar buying is that Pakistani currency is no more acceptable in Afghanistan,” said Malik Bostan, President Forex Association of Pakistan. For years, the Pakistani rupee was acceptable in Afghanistan along with Afghani, but the recent heightened tension between the two countries resulted in the shape of a ban on the rupee.

Currency dealers had no idea how much dollars are being taken out from Pakistan but they said the rising rate speaks about the demand and pressure.

The rupee-dollar parity rate has been a serious issue and the State Bank used to intervene in the inter-bank market to keep the exchange rate stable. However, the open market fluctuates on supply and demand factor. For more than six months the exchange rate in the inter-bank market has been almost stable at Rs104.8-90.

But the open market faced pressure and the dollar crossed Rs106 in May and July and it soared to Rs106.50 in August. Current exchange rate is hovering around this figure.

The trade with Afghanistan is in absolute favour of Pakistan as exports to Kabul have gone up to $1.23bn while imports remained negligibly small at $40 million in the outgoing fiscal year.

Published in Dawn, August 21st, 2016