PKR exchange gap shrinks below IMF's 1.25% limit

September 06, 2023 (MLN): As a result of the ongoing crackdown against speculators, hoarders and smugglers, the dollar in the open market lost its dominance as the greenback fell by Rs21 to Rs310 per USD compared to the close of pre-crackdown on Monday. Consequently, the gap between the open market and interbank has fallen to 0.9 below the IMF’s suggested level of 1.25%.

Besides the official Kerb market where the dollar is trading at PKR 310/313 per USD [as of 2:55 pm PST], the black market for Hawala/Hundi is also experiencing a significant decline in dollar rates.

According to sources, the greenback is currently trading at PKR 318/323 per USD in the black market, compared to the highest halwa rate was 338/342 last Friday.

Previously, the rising demand for dollars due to speculation and smuggling had continually widened the gap between open market and interbank rates, causing significant concern.

On September 4, 2023, the gap surged to Rs25.30 per USD or 8.03%, far exceeding the IMF's recommended threshold.

It is safe to say that the government's initiatives are effectively yielding results in curbing speculative activities in the open market without requiring any intervention on the interbank side.

The situation could further improve if the government takes similar initiatives against gold smuggling, as individuals who cannot purchase dollars may now opt to invest their money in smuggled gold.

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