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Dollar crosses Rs160 after five months in Pakistan

Coronavirus fourth wave fears making market jittery

SAMAA | - Posted: Jul 9, 2021 | Last Updated: 3 months ago
Posted: Jul 9, 2021 | Last Updated: 3 months ago

Artwork: Syed Saad Ali

The dollar crossed the Rs160-mark after five months as fears of a fourth wave of coronavirus spread in Pakistan. Importers have increased trade to stock up if lockdowns are imposed.

The dollar could be bought for Rs160.20 on Friday in the open market. It interbank rate was Rs159.20.

“If you ask me, most of the fundamentals say the dollar rate should not rise,” said Exchange Companies of Pakistan Secretary Zafar Paracha. “Remittances are good, the Current Account has been in surplus or close to it. Foreign exchange reserves are also at a record high.”

If Pakistan has no commitment with the IMF for currency devaluation, I see the rupee bouncing back soon, Paracha said.

But, he added that the fear of Covid-19 has been making the market jittery.

“Take one example of the restaurant industry. There are many other industries affiliated with it. If it closes, tens of other industries are affected. Hoteling is no more a luxury now. Many outstation workers rely on the industry.”

Another dollar expert, Malik Bostan, who is the chairman of the Forex Association of Pakistan, said that more FATF conditions for Pakistan to satisfy and a delay in the IMF session to evaluate Pakistan on its programme has made the dollar rise.

But he added that China’s support to Pakistan will keep the dollar in check.

“Pakistan just received $1 billion from China. It has helped increase dollar reserves to a five-year high. China will continue to put its weight behind Pakistan and try its best to make CPEC a success,” he said.

“That will not let Pakistan’s economy tumble. It means the dollar will have a stable long-term outlook,” he said.

But he added that the fear of a fourth wave of the coronavirus was making the market jittery as importers have started panic buying, suspecting another potential lockdown.    

“The demand for dollars is coming from importers, who were importing more than usual, fearing coronavirus restrictions again. So, they want to have enough stock if the government put restrictions and shipping lines choke again,” he said.

“It is apparently a short-term demand increase for dollars,” said Bostan. “It may soon start going down again.”

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