Dollar reaches eight-month high in Pakistan

The US dollar reached an eight-and-a-half-month high and was being traded at Rs161.55 on Monday. Experts say the dollar supply reduced in the country as the government’s amnesty scheme for the construction sector expired at the end of June.

“The influx of dollars in the country reduced as the amnesty scheme expired in June,” said Malik Bostan, the chairperson of the Forex Association of Pakistan.

He said that the amnesty scheme for the construction helped people whiten their money hidden at home or stashed abroad in foreign banks.       

According to the Securities and Exchange Commission of Pakistan, the construction and real estate sectors took the lead with the incorporation of 474 business ventures. The government has been focused on these sectors and wants to stir economic growth through it. The increase in construction activity has boosted cement sales to a historic high.

Related: Top businesses in Pakistan: IT, construction, real estate

Bostan further said that the increase in terrorist activities such as the attack on a bus carrying Chinese engineers and also the kidnapping of the Afghan ambassador’s daughter has a negative impact on investment. “Such bad news turns away foreign direct investments,” he said.    

Meanwhile, Zafar Paracha, the SECP secretary, said that the government may have reached an agreement with the IMF to devalue the Pakistani currency. He remarked that with the increase in Pakistan’s exports, remittances, and foreign exchange reserves in the last financial year, there was no reason for the rupee to depreciate.

Zafar Paracha said that if the government has reached an agreement to meet the conditions of the IMF, the value of the dollar could reach Rs165.

An official from the credit and trade department of a small bank said on condition of anonymity that a large amount of money was paid for oil imports on Monday. As the demand for the dollar increases, so does its value.

It should be noted that the value of the dollar in August 2020 was at the highest level of 168.87.