Flare-up at borders may destabilise exchange rate

Tensions with Iran and Afghanistan could lead to uncertainty in the country and destabilise the exchange rate, as the demand for dollars will rise, said currency dealers in Karachi. A currency dealer mentioned that the grey market, which had disappeared after the crackdown, started showing activity on Thursday. “I am not sure about the grey market activity. If the situation leads to more uncertainty, it could be exploited by the grey market players,” said Zafar Paracha, General Secretary of the Exchange Companies Association of Pakistan (ECAP). However, he denied having any information about the grey market activity and emphasised that the market should be alert. The crackdown on illegal currency business and smuggling of dollars and goods to Iran and Afghanistan helped government efforts to stabilise the exchange rate.