Open-Market Dollar Sales Fall 50% as Grey Market Reappears — What It Means for the Rupee

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Pakistan’s open-market dollar sales plunged roughly 50 percent this month, sparking fresh concerns that a resurgent grey market is absorbing demand and could put renewed pressure on the rupee. Currency dealers say the steep drop in dollar availability for licensed money-changers is reshaping where and how Pakistanis buy foreign currency — with implications for exchange-rate stability, liquidity and the official fight against illicit forex channels. DawnReuters

What happened: the numbers behind the panic

Banking-market dealers report money-changer sales to the formal banking system have fallen sharply — to about $115 million this month, down from considerably higher monthly averages seen earlier in FY25. At the same time, official data show remittances remained robust at roughly $3.2 billion in July, underscoring that falling open-market sales are not due to a collapse in overseas inflows. DawnThe Express Tribune

Market quotations also reflect recent volatility: the open-market interchanges tightened around the low-to-mid-283 rupee range (USD/PKR ~283.58 in late August), after earlier trading nearer to the high-280s. That gap between interbank, open-market and grey-market rates is precisely what creates arbitrage opportunities that illicit channels exploit. Trading Economics

Why licensed sales have fallen

Dealers and exchange firms point to three principal reasons for the sharp decline in documented open-market sales:

1. Stricter documentation and enforcement. Authorities have tightened paperwork and conducted targeted actions against unlicensed operators, limiting the flow of dollars through familiar retail outlets and discouraging larger documented transactions. Reuters
2. Shortages at point of sale. Money-changers say they are now mainly selling dollars that arrive directly from the public; in many places buyers are snapping up cash before it reaches licensed shops. Dawn
3. Migration of trades to informal channels. Crackdowns have pushed some activity offline and into encrypted messaging apps and private networks, where deals are harder to monitor. This reduces measured open-market volumes even if overall trade continues in other forms. Reuters

The danger: grey market absorbs demand

As documented channels shrink, grey-market dealers can quote higher premiums — recent reports show unofficial rates fluctuating between roughly Rs287 and Rs292 per dollar in major cities — attracting individuals who need foreign exchange for tuition, medical treatment or travel and are willing to pay a premium to avoid delays and paperwork. That dynamic can widen the spread between official and unofficial rates and complicate monetary policy. Dawn

What policymakers and markets should watch

Analysts say a few developments would help calm the market:

• Stronger FX reserves and stable remittance flows. Robust reserves and predictable remittances reduce the need for intervention and improve confidence among banks and money-changers. The Express TribuneState Bank of Pakistan
• Careful central-bank interventions. Past large-scale dollar purchases to stabilise the market have drained liquidity; experts advise more surgical interventions and transparent communication when taking action. State Bank of Pakistan
• Closer monitoring of illicit channels. Enforcement that targets large smugglers and networked dealers — while avoiding overreach that simply drives trade further underground — is critical. Reuters

Short-term outlook

If open-market sales remain suppressed, grey-market premiums may persist or widen, keeping pressure on households and firms that depend on timely access to foreign currency. Conversely, a return of consistent monthly sales to licensed channels — supported by predictable remittance incentives and improved confidence in official rates — could help narrow spreads and stabilise the rupee. Market participants will be watching SBP announcements, reserves data and any coordinated enforcement moves closely. State Bank of PakistanTrading Economics

What this means for ordinary Pakistanis

For parents paying foreign tuition, patients arranging treatment abroad, and businesses settling import bills, the reappearance of the grey market raises costs and legal risks. Where possible, individuals should prioritise documented channels (banks, licensed exchange companies) even if that sometimes requires earlier planning; for policymakers, the priority is to restore reliable, legal access so citizens aren’t forced into informal and riskier routes

Anchor: State Bank of Pakistan — International Reserves & Remittances (July 2025)
Why: Official data on remittances / reserves to back your $3.2bn remittance point and reserve commentary.
Placement: After the sentence that mentions “remittance inflows remain steady at $3.2 billion in July.” State Bank of Pakistan+1

Anchor: Brecorder — “Pakistan receives $3.2bn in remittances in July 2025”
Why: Independent reporting of the July remittance figure (good corroboration and local market tone).
Placement: Same paragraph where you discuss remittances and monthly flows. Business Recorder

Anchor: Reuters — “Crackdown pushes black-market dollar trade online”