KARACHI: The US dollar was traded at a record price of Rs122 in the open market on Tuesday, a day after the 3.8 per cent devaluation of the local currency by State Bank.

The interbank market also witnessed a fluctuation in prices, with the dollar trading at Rs121.50 but finally settling at Rs120.

Rupee devaluation for the third time during the current financial year has greatly weakened trust on the local currency, resulting in hoarding of dollars by corporate sector — including banks — as well as the common man.

Due to hoarding, dollar was not available in the market, except in ‘A’ category exchange companies. It was also noted that other currencies including euro, pounds and riyals were rarely available for buyers in the open market.

Exchange companies said common people were not selling dollars. Only those who badly needed money were exchanging the greenback for Pak rupee in extremely small quantities.

Exchange companies — who issue average rate of dollars — reported dollar prices between Rs121 to Rs122. In fact, the dollar was even higher than Rs122 in the market for buyers.

The open market is the only source of foreign currencies for travellers, health tourists and students.

This is the first Ramazan when the dollar appreciated against the rupee. Traditionally inflows of foreign currencies increase during Ramazan for celebration of Eidul Fitr, charity donations and Zakat.

Currency dealers said it was not possible to believe that no more devaluation would be made in the near future which means exchange rate will remain vulnerable.

They also said the vulnerable exchange rate has opened flood gates for illegal business of foreign currencies as the rate is higher than the legal open market.

The State Bank has recently put more restriction on buying and selling of dollars in the open market as any person who wants to buy or sell $500 or more would have to produce a copy of the Computerised National Identity Card.

Currency dealers in the interbank market said the dollar has settled at Rs120 after fluctuations but the market is shaky due to the third devaluation in seven months.

Dealers said that banks have earned big money with the sudden rise in dollar rates on Monday, given that banks’ holdings of dollars have been increasing.

Another report of the State Bank shows that scheduled banks’ holdings of dollars have started increasing despite shortage in open market and reached $6.378 billion.

Within a month from May 4 to June 1, the holdings of scheduled banks increased by $255 million.

Published in Dawn, June 13th, 2018