KARACHI: The dollar was traded at Rs112 in the open market on Friday, setting a record against the local currency although the rate in the interbank market remained almost unchanged all week.

Currency dealers said multiple factors are affecting the exchange rate, which has come under pressure following souring Pak-US relations during the last couple of months.

Tensions with the United States factored in the move, according to some currency dealers, but shortages of the greenback in the currency markets also had other drivers.

“We sold dollar at Rs112 at the end of closing hour of the market and it may go further high if the shortage of dollar persists,” said Zafar Paracha Secretary Exchange Companies Association of Pakistan.

Currency dealers also held the State Bank’s decision responsible for the shortage of greenbacks in the open market.

The State Bank on January 1 cut the import of cash dollars to just 35 per cent against the export of foreign currencies.

The exchange companies were told to bring only 35pc cash dollars against earlier practice of bringing 100pc cash dollars physically on behalf of export of foreign currencies to Dubai. The rest of the dollars are to be brought through banking channels.

Some of the currency dealers supported the idea but a number of them warned that it would create shortage of dollars in the market since the banks often delay releasing cash dollars, they alleged.

Since the implementation of the decision the dollar gained about Rs1.20 while the interbank market remained silent as the price did not fluctuate significantly. The dollar price gap between open and kerb markets has increased to Rs1.40 over the week.

Published in Dawn, January 6th, 2018