Exchange companies deposit dollars in SBP amidst dollar depreciation

KARACHI: In the wake of a rapid decline in the value of the US dollar and escalating concerns about illegal dollar speculation, exchange companies started to deposit dollars in the State Bank of Pakistan, ARY News reported on Thursday.

Sources have indicated that exchange companies are reducing their dollar reserves out of apprehension over the further depreciation of the dollar.

Sources close to the matter stated that the exchange companies were holding dollar reserves due to the recent surge in its value against the Pakistani rupee.

The decision to intensify action against the black market is anticipated to have a further impact on the dollar’s value.

Exchange companies are currently purchasing dollars in the open market at the rate of Rs 305 per dollar, and exporters holding dollars – for the sake of profit – are now facing setbacks.

Sources stated that after the interim government announced to commence a crackdown against the smuggling of US dollars. Sources suggest that there has been a noticeable increase in the number of dollar sellers in the open market. As the nation’s reserves improve, there is optimism within the State Bank that the dollar’s value may eventually fall below Rs 300.

Currently, in the Interbank market, the dollar has become cheaper by Rs 2.48, standing at Rs 304.50, while in the open market, it has depreciated by Rs 4.00, reaching Rs 308.

Zafar Paracha claimed that the exchange companies have started selling dollars to the State Bank of Pakistan due to the depreciation of dollars in the open market.

Due to the crackdown, the demand for dollars in the open market has dropped, leading to more dollar sellers than buyers at the counters of the exchange companies.

According to Zafar Paracha, almost 30 per cent increase has been observed in account of dollar sellers, with the lower demand for dollars and an increase in sellers causing the dollar to decline further in both the Interbank and open markets.