Currency crunch as govt pushes dollar down

The government’s efforts to artificially bring down the dollar rate are faltering, with market forces pushing back against a Rs250 exchange rate target and foreign currencies reportedly vanishing from the open market. A crackdown on dollar smuggling launched on July 23 has led to a minor depreciation of around Rs3 in both the open and interbank markets. However, this has done little to bridge the gap between market sentiment and official expectations. The dollar continues to trade above Rs280, and a noticeable shortage has emerged. In recent meetings held in Islamabad with banks, currency dealers, and jewellers, authorities reportedly reiterated their desire to bring the dollar down to Rs250. However, participants in the meetings described the target as unrealistic. Some bankers estimate the real market parity to be closer to Rs281.