Illegal forex market may hit exchange rate stability

Currency dealers in the banking market have reported a sharp 50 per cent decline in dollar sales by money changers this month, amid concerns that the grey market has re-emerged, buying dollars at higher prices. Dealers indicated that while remittance inflows remain unaffected, with July witnessing $3.2 billion in transfers, the drop in open market sales could destabilise the exchange rate. Money changers explained that the strict documentation requirements for dollar purchases are limiting their sales, with only transactions of up to $500 not raising any questions. According to bankers, the open market has sold around $115 million to the banking sector this month, significantly lower than the same period last year.