Middle East crisis puts rupee under pressure
The escalating war in the Middle East has changed forex market sentiments as investment inflows dried up creating dollar shortages in banks resultantly the greenback started to appreciate amid strong demand, especially from importers. Bankers dealing in the currency market said the importers were unable to find dollars even at a rate higher than quoted in the banking market. “Banks have no dollars to meet importers needs, while the State Bank of Pakistan (SBP) is buying greenbacks to maintain its foreign exchange reserves around $8 billion level before the start of talks with the IMF early next month,” said Atif Ahmed, a senior banker and a currency expert. With the start of the Israel-Hamas war, the exporters immediately stopped selling their holdings as the greenback started appreciating. Earlier, they were selling their proceeds in advance to avoid loss due to regular dollar depreciation. The dollar depreciated for 28 consecutive sessions before it reversed the trend after the war began in the Middle East.