KARACHI: After remain­ing stabilised at around Rs223 in the last week, the rupee on Monday came under pressure and depreciated by 22 paise to close at Rs223.91 in the interbank market.

However, currency market experts see another side of the picture where the State Bank of Pakistan (SBP) has been curbing imports including those of key raw materials required to keep the industry’s wheel moving.

Researchers and analysts have been suggesting to the government to take some practical steps for reducing energy and import bills, but a general disappointment could be sensed in the market. Nobody believes the interbank exchange rates are real, particularly against the offers available outside the regulated market. Since the open market is trading without US dollars, the unregulated grey market has taken a strong presence so much so that it attracted remittances from overseas Pakistanis.

Remittances have been on the decline for the past three months.

Analysts believe that the remittances (of up to $300m) are coming through unregulated channels. Either the people dealing in hawala kept the dollars abroad and make payments in rupees in Pakistan or the inflows in this grey market are sold at a much higher price. The price is quoted at around Rs260, which is close to the rate being reported in the dollar-less Kabul market.

“The SBP has agreed to allow us to spend 20pc of remittances coming through the exchange companies, but the Ministry of Finance has yet to allow it,” said Malik Bostan, Chairman of the Exchange Companies Association of Pakistan (ECAP).

Published in Dawn, December 6th, 2022