Amid State Bank’s mum, the dollar shortage in the provincial capital entered the second straight week on Monday.

Almost all exchange companies were refusing to sell the US currency, which, if available, was available only in black and on higher rates. Some money dealers, who were ready to sell the greenback with some references, were selling one dollar at the rate of Rs107.5 instead of the quoted rate of Rs106.20.

The Nation talked to more than half a dozen money exchangers and all of them declined to sell the US dollar, saying the dollar stock was finished. The companies included Dollar East, Euro Currency Exchange, Khanani & Kalia International Private Ltd, Wall Street Exchange Company Ltd, Al-Azia Money Exchange, A.K Money Exchange, Lahore Money Exchange, Pakistan Forex Exchange and Al-Hameed International Exchange. All the money dealers said that dollar is short but they were not ready to give the reason of shortage.

State Bank of Pakistan senior joint director Khubaib Usmani, while talking to The Nation, said that money dealers are bound to follow the rules of central bank, which can take action against them for violating guidelines. “You should send us the detailed query regarding shortage of dollar in Lahore and we will respond in a couple of days,” he replied when asked why the central bank is not taking action against money dealers.

Experts said that money dealers are bound to purchase as well as sell all currencies including the US dollar under the directives of central bank. The money changers are also bound to keep a certain stock limit of foreign currencies and SBP officials team can check the record of whole supply of currencies.

Malik Bostan, President, Forex Association of Pakistan, said that no money dealer can refuse the sale of dollar below the limit of 50,000 and if they violate the rules of State Bank, they will be served show cause notices. On repeated violation the money exchanger can even lose its licence, he added.

It is surprising for many that the dollar is not available and exchange rate is still vulnerable despite supply of dollars from the State Bank and nearly $21b foreign exchange reserves.

“There is no significant shortage of dollars in the market due to high forex reserves and continuous dollar supply by the central bank in open market. The rates are stable for the last several weeks. If there is some shortage it’s because of high demand of dollar from gold importers,” said Malik Bostan.

He told The Nation that deals for $1000-1,200 were easily available in the market, but bigger amounts were difficult to manage. Bostan said he was ready to provide any amount required on market rate. Money dealers only refuse to sell over $50,000 to avoid going into legal formalities, he added. He said that dollar was also under pressure because of higher demand from the travelers.

According to experts, the raids of Federal Investigation Agency on currency market in Peshawar have created panic in forex markets in other parts of the country including Lahore, creating artificial shortage of greenback. They said that exchange companies were refusing to sell dollar not due to shortage of greenback, but owing to the fear of any inquiry or investigation regarding daily supply of currencies as most of them (dealers) run a parallel business of hundi.

Moreover, the arrest of currency dealers in Peshawar has also affected dollar supply to other cities of the country, as major supply of foreign currencies from Afghanistan to Pakistan has been halted temporarily due to the raids, they added.

Malik Bostan said that the government has lifted ban on import of gold, imposing just 1 percent duty in Pakistan but not providing facility of opening LCs to the gold importers. They are bound to lift dollars from open market instead of getting from banks like other importers following decline of gold rates in international market, he added. The gold importers have also created disturbance in currency market which are purchasing dollars to import the gold which is later sent to India where import duty is higher than Pakistan.

Shortage of dollar is surprising when the State Bank has been supplying dollars to the open market to meet the demand.