Pakistanis Continue To Hoard USD Despite Recent Rally In Rupee

The Pakistan rupee’s biggest rally in 16 years has been nothing but a tease for Nazim Salim.

Seeing it as an opportunity to settle an old debt in dollars cheaply, he had trudged over to Karachi’s money changers to buy $200. Yet all four traders Salim approached in the kerb market, as it is known to Pakistanis, had the same answer: They had no dollars to sell him.

The hoarding of greenbacks in the kerb market, where a fifth of Pakistan’s foreign-exchange transactions are conducted, shows money changers are unconvinced the local currency’s gains will last. While the rupee has been lifted to a nine-month high by pledges of more than $8 billion in foreign aid, the nation’s economy remains hampered by a deteriorating trade balance, power shortages and a Taliban insurgency in the north.

Bloomberg

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