The dollar rate crept up to Rs154.80 in the open market as lockdown fears loomed because Covid-19 cases are going up in the country. It has increased by Rs1.20 in the last four days.
“Importers have been opening LCs (Letter of Credit) in haste fearing a lockdown in the country,” said Malik Bostan, who is the chairperson of the Forex Association of Pakistan.
He explained that importers have started opening bank LCs to import now even if they were supposed to open them two months later. An LC is an assurance by the importer’s bank to the bank of the seller abroad that a certain amount has been locked in their name. When the consignment arrives, the payment is released. It is basically payment in transit.
“It may become difficult to open LC and import if there’s a lockdown. And then if lockdown begins internationally, the shipping lines will again choke and everything will come to a halt.”
He added that government has allowed the private import of Covid-19 vaccines.
“Vaccine imports alone could cost will approximately $1 billion this year,” he said. “It may put pressure on foreign exchange and subsequently on the dollar rate.”
But another currency expert Zafar Paracha, the secretary of the Exchange Companies of Pakistan, said that the recent hike in the dollar rate was only due to a correction and weekend effect.
“The rate fell sharply so it took a bit of a correction. But at the moment, it is only the weekend effect,” he maintained. “Remittances will arrive by tomorrow and the dollar rate will return to normal.”
