KARACHI: Despite record-high remittance inflows and a current account surplus, the currency market is facing a dollar shortage, with banks charging higher than the officially quoted rates, according to market sources.

Currency experts expressed surprise over the tight dollar liquidity, especially after the close of the fiscal year 2024-25 and the completion of all due payments by the State Bank of Pakistan (SBP).

Currency dealers said importers are struggling to purchase dollars for their consignments, with even opening a letter of credit (L/C) for as little as $15,000 proving difficult.

“I have been trying hard to pay my daughter’s university fee for more than a month, but no bank is willing to provide the required dollars,” said Abid Ali, whose daughter’s tuition fee for a university in the United States is around $19,000.

What is more alarming is that despite the acute shortage, no banker or exchange company representative was willing to be quoted, fearing repercussions for speaking about the real state of the currency market.

Students, travellers, patients struggling to get forex from banks

Bankers are charging Rs2 to Rs2.5 per dollar above the SBP’s quoted rate. The central bank’s rate on Thursday stood at Rs285.16, meaning importers are effectively buying dollars at Rs287-288 per dollar.

The Exchange Companies Association of Pakistan (ECAP) quoted the open market rate on Thursday at Rs288.60 per dollar — a rise of Rs10 from Rs278 a year ago.

Despite having sold about $5bn to banks during FY25, most exchange companies are facing a dollar shortage. Besides importers, students, travellers and patients in need of medical treatment abroad are also struggling to get dollars from banks.

“I am surprised why the State Bank has tightened the market so severely when it has already met the IMF target, maintained a current account surplus and made all external debt servicing payments,” said one analyst, adding that the market should be eased, particularly for importers, as higher imports are necessary for economic growth.

Uptick in SBP reserves

The foreign exchange reserves held by the State Bank rose by $23 million to $14.525bn during the week ending July 11. The SBP did not specify the source of the inflow, but bankers believe the central bank has been purchasing dollars from the interbank market.

The country’s total reserves have reached nearly $20bn, including $5.431bn held by commercial banks.

Published in Dawn, July 18th, 2025