KARACHI: Stringent documentation requirements and video-making have turned away buyers from the currency market while the investment shifted from dollars to unchecked gold buying.

Currency dealers said the dollar buying has drastically dropped these days due to strict documentation and the surplus greenback is being sold to banks.

“We have to make video of every buyer which annoys them. People don’t like this practice so they try to avoid the currency market altogether,” said Forex Association of Pakistan President Malik Bostan.

These videos are kept in branches as well as the head offices of exchange companies and are produced as evidence at the time of State Bank audit. Apart from videos, buyers also have to produce original CNIC and answer a number of questions regarding the purpose of purchase.

Similarly, those seeking greenback as an investment opportunity have switched to the gold market.

“There is no restriction on buying gold from the market. This is entirely different world but it is difficult to understand that while the government is running after every penny, the gold trading is free for buyers,” said Exchange Companies Association of Pakistan Secretary General Zafar Paracha.

“It’s not difficult to understand why the gold market is flourishing locally these days with prices more than the international rates,” he added.

The yellow metal has been on the rise lately due to steep devaluation of the rupee over the past one year. “Another reason for low buying of dollars is the depressed economic activity. Dollar is not being purchased for savings while buying for travelling has also dipped due to slow economic activity,” said Paracha.

Currency dealers said they have deposited $550 million surplus in banks from May to July. Bostan was confident that another $800m would be deposited over the next three months.

“We deposited about $2 billion in FY19 while we hope to put in $2.5bn-3bn during this year,” said Bostan.

Exchange companies provide dollars for travellers, health treatments abroad, college and university fee, Hajj and Umrah etc. The government has made it difficult to send greenback abroad while exchange companies have to ask a number of questions before selling the currency, particularly big sums. Dealers said the long questionnaire generally irritates buyers.

Published in Dawn, August 20th, 2019