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Pakistani exchange firms run out of cash
Publication Date : 15-10-2013
Exchange companies ran out of cash as dollar selling skyrocketed on Monday, with the turnover shooting up to 200 to 300 per cent above than the normal days. Long queues of people were seen at exchange companies all over the country.
“This was absolutely a selling day and we estimate that more than $35 million were deposited in the banking system by the exchange companies,” said Exchange Companies Association of Pakistan chairman Malik Bostan.
He said the exchange companies had deposited about $100 million in the banking system during the last week.
The heavy dollar selling depreciated the value of the greenback. The buying price was lower than the inter-bank market as the exchange companies were buying dollar at 106 Pakistani rupees while some ‘B’ category companies buying at 105.90 Pakistani rupees at different areas of Karachi.
“The rush was witnessed across the country. It’s a lesson for the dollar hoarders who were waiting for higher price,” Bostan said.
Currency dealers said that since the inter-bank currency market remained stable at 106.20-25 Pakistani rupees on Monday, the open market could not see greater appreciation of the local currency.
If the rate was lower in the inter-bank market, the price in the open market could be much lower than today (Monday), the dealers said.
The currency dealers identified three major reasons for dollar showering in the open market.
“Thousands of Pakistanis from Dubai and adjacent countries visit their homes and bring millions of dollar to celebrate Eid,” said Anwar Jamal, a currency expert and dealer in the open market.
Secondly, the long bank holidays also created panic among the people who needed local currency to spend, he said.
Third reason was that the people who kept dollars and waiting for higher prices finally got out of cash and rushed to get whatever available from the market.
Despite sharp fall in the reserves, the dollar has been relatively stable in both currency markets for more than two weeks.
The government succeeded to escalate hopes for higher inflows in near future from the International Monetary Fund, World Bank, Islamic Development Bank and Coalition Support Fund.
Currency dealers said the rupee gained about 40 to 50 paisa against the dollar on Monday and they hoped another spell of dollar selling after Eid holidays.
Though banks will remain closed for six days from Tuesday, currency dealers with cash would open their branches tomorrow, Bostan said.