KARACHI: The persistent economic uncertainty on Monday further weakened the rupee making the dollar holders reluctant to sell their holdings as the greenback posted massive gains both in open and interbank markets.

The State Bank of Pakistan (SBP) reported that the dollar price increased by Rs7.03 to Rs269.63 from Rs262.60 on Friday. However, the exchange companies reported the interbank rate at Rs272 compared to Rs265 the previous day.

Similarly, the dollar price in the open market rose to Rs275 from Rs269 on Jan 27. Exchange Companies Association chairman Malik Bostan said for the first time Kabul rate (grey market) was lower than the open market rate.

He said that despite a very high dollar rate, the open market could not attract sellers and remained dry most of the time. He said the highest price was noted in Peshawar where the greenback was traded in the range of Rs270 to Rs282.

“The demand for greenback has increased after the SBP allowed exporters to arrange dollars themselves for importing raw materials required for the manufacturing of exportable products,” Mr Bostan said.

The dollar appreciated by Rs38.7 or 16.7pc in the interbank market in the last three sessions against the local currency after the open market removed the self-imposed rate cap.

Currency dealers expect that exporters may bring back their proceeds since the dollar rate has risen too high, even beyond their expectations. “They [exporters] will earn additional billions of rupees just because of this over 16.7pc devaluation.”

However, some currency experts said dollar holders were reluctant to sell their holdings amid speculations by some political figures about further devaluation.

“I believe that remittances from next month will increase with this appreciation of the dollar. Overseas Pakistanis would now remit their money through legal channels,” hoped Mr Bostan.

The remittances have been declining for the last three months due to a big difference in dollar prices. The grey market was offering Rs30 to Rs35 per dollar over and above interbank and open market rates.

Published in Dawn, January 31st, 2023