KARACHI: The import of dollars from Dubai witnessed a drastic drop of almost 50 per cent during April and was a major reason behind the recent dollar price hike in the open market.

Currency dealers said the import of dollars has been falling for the last three months but April saw a much sharper decline as third currencies (other than dollars) were either short in supply or available at a higher price.

The dealers buy third currencies from local market, sell them in Dubai and bring the same amount in dollars to the country – a legal process.

“The import from Dubai has dropped by 50pc in April since the currencies other than dollar are hardly available,” said Forex Association of Pakistan’s President Malik Bostan. According to him, the monthly import of dollars from Dubai used to be about $300 million which provided great support for the exchange rate in the open market. Currently that figure ranges between $150m and $200m.

Zafar Paracha of Exchange Companies Association of Pakistan said last week that third currencies were grossly used by smugglers and those having billions of undeclared rupees. The ill-gotten money is then whitened with these currencies and taken away from the country.

The short supply and high demand for the dollar has pushed its rate to Rs118.70. The State Bank of Pakistan (SBP) held a meeting with the representatives of the currency dealers last week asking them to bring down the dollar prices and assuring them the supply of the currency.

However, market sources said the SBP did not release the greenback on Monday as it continued to trade at Rs118.70 – the second highest price within a week.

Despite assurances by the currency dealers to bring down the dollar rates, the greenback kept its rate intact. Currently, the dollar gets a 2.68pc higher value in the open market compared to the inter-bank which has remained unchanged at Rs115.60 since the 4.5pc deprecation in March.

This gap between the two rates attracts illegal transactions of money and poses risk to remittances from the banking channel.

Published in Dawn, May 2nd, 2018