Karachi: Pakistani rupe is under increasing pressure as the demand for dollars increases, while exchange companies are fighting with a serious shortage of cash.
Currency experts have warned that administrative measures aimed at supporting rupee can be counterproductive, especially in the face of unforeseen events, such as the recent devastation of floods throughout the country.
Despite the growing demand for dollars and a reduction in supply, rupee has managed to appreciate from the repression of the government and the strictest monitoring in July. However, experts believe that the current trend could be unsustainable if the demand continues to exceed the supply.
According to currency dealers, many exchange companies are running out of US dollars, which raises concerns about the potential hoarding or smuggling. “While smuggling has been largely controlled, hoarding is increasingly likely,” said a currency dealership. This scarcity is also a sign of illegal currency operators that possibly enter the market, exacerbating the situation further.
Faisal Mamsa, CEO of TresMark, warned that “no force can overcome the market when the foundations are stacked against it.” The rupee has been artificially strengthened by administrative measures, especially in the open market, which has led to significant slowdown in real cash transactions. “Exchange companies almost never have Forex effective,” Missa said.
Experts warn of administrative measures could be counterproductive
This situation is expected to have a negative impact on remittances in the near future. Missa also suggested that he could revive the use of Hawala transactions or cryptocurrency exchanges, which are increasingly used as alternatives for foreign currency care.
Speaking before the Permanent Committee of the National Assembly, Dr. Inayat Husain, Vice Governor of the State Bank of Pakistan (SBP), confirmed that the strength of the rupe since mid -2014 has been largely due to higher entries and administrative controls.
To avoid “excessive correction”, the SBP has bought $ 7.8 billion in the market, which increases reserves to $ 14.5 billion (approximately 2.3 months of import coverage). However, officials argue that the rupee is now “quite valued”, and that interventions are necessary to guarantee external stability and concerns about an artificial peg.
Meanwhile, exporters are braking their income, further adjusting the market supply. This has created an uncomfortable calm, an appearance of force in the midst of a supply drying. Experts warn that if the tickets continue stagnant, the pressure on the rupe could intensify, which leads to a strong correction. “As the story shows, markets are always right,” Missa added.
In a positive note, Pakistan will benefit from a 50 percent rate in the United States on Indian textile exports, which has created a market gap for a value of around $ 16 billion. In addition, Pakistan enjoys a 19PC tariff about its exports to the United States, which is a bit more favorable than Bangladesh and Vietnam, which face a 20 -piece rate.
Posted in Dawn, August 31, 2025
