The open market dollar sale has recorded a sharp 50 percent decline this month, with currency dealers warning of renewed grey market activity that could pressure Pakistan’s exchange rate.
Banking market dealers noted that while remittance inflows remain steady at $3.2 billion in July, the steep fall in dollar sales is creating uncertainty. Open market money changers sold around $115 million to the banking system this month, significantly lower than the same period last year.
According to money changers, strict documentation rules for dollar purchases have reduced sales, with only small transactions of up to $500 being processed smoothly. A dealer, said the open market is facing a shortage of dollars, selling only what comes in from the public, while buyers appear to be snapping up the currency before it reaches money changers.
Money changers estimate sales for August may not exceed $200 million, compared to the average monthly figure of $350 million in FY25 and $300 million in July FY26.
Grey Market Rates Rise Amid Growing Dollar Demand
Concerns are also mounting about the resurgence of illegal markets in major cities, where rates fluctuate between Rs287 and Rs292 per dollar. These higher rates are attracting individual sellers and buyers seeking dollars for tuition fees or medical costs abroad, despite the difficulties in securing funds for such legitimate needs.
The official exchange rate has been falling since the government crackdown on smugglers and illegal operators. The dollar dropped by Rs4 in the open market, sliding from Rs288.50 on July 22 to Rs283.58 currently.
Bankers clarified that the decline in the open market dollar sale is not linked to changes in government incentives for banks and money changers. They emphasized that remittance inflows remain strong but warned that price controls are enabling grey market players to exploit the gap by offering higher rates.
Analysts suggest the market could stabilize with stronger foreign exchange reserves, consistent remittances, and improved ties with key partners like the US and China. They also advised the State Bank to avoid large-scale dollar purchases, as seen in FY25, to maintain liquidity and stability.