KARACHI: After a long time, the open market is running short of US dollars, which increased the price compared to the interbank rate of the greenback.

The Forex Association of Pakistan reported the dollar traded at a price of Rs218 in the open market on Saturday, while the inter-bank dollar rate was Rs214.65 on Friday. Banking markets are closed on Saturday.

Currency dealers said that the latest development has created a shortage of foreign currency, particularly the UAE dirham, and ultimately exportable currencies declined.

“Each Pakistani needs to declare 5,000 dirhams at the UAE airport at the time of landing this week, which suddenly created a shortage,” said Malik Bostan, president of the forex association, adding that 21 flights from Pakistan land in Dubai each day, carrying a total of 4,200 Pakistanis per day.

Recently, Dubai authorities have asked Pakistanis to have 5,000 dirhams when landing at Dubai airport. The calculations show that 4,200 Pakistanis require about 21 million dirhams each day to land in Dubai.

“The dirham is not available in the open market while the price has also gone up,” he said, adding that those available foreign currencies are exported to Dubai to bring back an equal amount of US dollars. Higher dirham demand, in fact, created a shortage of dollars.

At the same time, the government’s new move asks people to declare their cash and other valuables at the time of departure and arrival.

Currency dealers said the declaration of cash and valuables at the time of arrival in their own country does not make sense; in fact, it has created a fear that declared cash and valuables could put them in trouble.

“Many people from the Middle East arrive with cash in riyals and dirhams. They also bring cash from their colleagues to directly handover the cash to their families in Pakistan. Now no Pakistani can take this risk,” said Mr Bostan.

The arrival of foreign currencies in the open market has dropped to the range of $1-2 million per day, while it was around $4m per day.

Currency dealers said the open market could see more shortages in the coming days since exportable foreign currencies have declined.

Published in Dawn, August 21st, 2022