The currency market is experiencing a shortage of foreign currency, with importers, travellers, and students facing difficulty in buying dollars. According to reports, commercial banks are now charging rates higher than the official quoted rates.

 

According to the reports, the shortage has occurred despite Pakistan achieving a historic current account surplus following a surge in remittance inflows. Market experts remain stunned over the shortage of dollars, outlining how the shortage persists despite all external payments having been cleared by the State Bank of Pakistan (SBP).

 

Reports indicate that importers are facing difficulty in obtaining dollars for their shipments. Currency dealers have revealed that acquiring a letter of credit for even small amounts is becoming difficult as well. These difficulties persist despite exchange companies having sold nearly $5 billion to banks in the fiscal year (FY) 2024-25.

 

The aforementioned conditions are akin to those imposed on the economy when the government levies import control measures. Analysts have outlined how the restriction of imports could stifle economic growth in the coming periods.

 

An analyst has expressed disbelief regarding the SBP’s decision to tighten the currency market. The analyst’s disbelief stems from the fact that the SBP seemingly has no reason to restrict the availability of dollars in the domestic market.

 

This is because Pakistan has met all of its pressing external debt obligations, and the SBP has achieved the International Monetary Fund’s (IMF) reserve target.

 

The SBP was able to meet the International Monetary Fund’s (IMF) $14 billion reserve target as Beijing decided to refinance a whopping $1.3 billion in commercial loans. Moreover, details from reports indicate that China also rolled over $2.1 billion, which the SBP has held in its reserves for the past three years.

 

Reports suggest that officials from exchange companies and commercial banks have remained apprehensive about commenting on the situation. Banks have reportedly started charging a premium of up to Rs2.5 per dollar over the SBP’s quoted rate.

 

This has caused importers acquiring dollars to face a rate of approximately Rs287.5 per dollar, up from the SBP’s quoted rate of Rs285.16. This is bound to reduce the profit margins of importers, as a depreciation in the value of the rupee makes imports more expensive.

 

Aside from importers, travellers and students have also reported difficulties in obtaining dollars, while patients seeking medical treatment abroad have reportedly faced similar issues.