Home/ News / World/  Amid dollar crunch, Pakistani importers head towards grey market for transaction

Extreme floods might not be a problem for Pakistanis anymore, but acute food shortage and drying forex reserve have made Pakistani food importers vulnerable to the grey market for payments.

Also Read: WHO raises alarm on disease in flood-hit areas of Pakistan

Under the grey market, the commodities are traded through markets that are unauthorised by the manufacturers. Many Pakistani importers of food from Afghanistan and Iran are now relying on the grey market for their payments as they are not allowed to buy dollars from banks or exchange companies.

Also Read: Pakistan floods: One-third of Pakistan under water, worst floods in its history

Due to heavy rainfall and extreme floods, many of its crops were destroyed. This has led to the nation facing an acute shortage of tomatoes, onions, potatoes, and other food items.

Also Read: Pakistan inflation hits 47-year high before full impact of flood

To deal with the growing food shortage in the country, the Pakistan government has allowed the import of these foodstuffs from neighbouring countries. However, the government has not made any arrangement for the provision of dollars to make payments against these imports.

Currency dealers and importers told PTI that they were asked to opt for a barter system with their Afghan and Iranian counterparts by exporting food items available in Pakistan. A barter transaction is the exchange of goods or services, in exchange for other goods or services.

It was found that import deals were possible in local currencies with Kabul due to the presence of Afghanis in Khyber Pakhtunkhwa, Sources in the Peshawar Chamber of Commerce and Industry told PTI.

But the Afghan exporters are still interested in payments through US dollars. They also asked to make payments through Dubai to take the benefit of the Hundi or Hawala systems. Under Hawala systems, two people can make a monetary transaction without the actual movement of money. It is an informal fund transfer system.

This is the main reason why most importers are making payments to Afghan sellers in cash dollars or through Dubai, Malik Bostan, a leading currency dealer told PTI.

“The government did not arrange dollars for the imports from Kabul while the importers are barred to buy dollars from the exchange companies or banking channels. This is the case with both Iran and Afghanistan," Bostan was quoted as saying in a report of the Dawn newspaper. He said in either case dollars from Pakistan are being sent abroad while "we need them badly".

Zafar Paracha, another currency dealer, told that the Afghan currency is available only in Peshawar where exchange or buying and selling is possible in Pakistani rupees and Afghanis.

As the Pakistani currency is continuously losing its value due to economic issues, most Afghan exporters are not willing to trade in Pakistani rupees.

“It’s the government’s illogical decision of not providing dollars for imports from Iran and Afghanistan while the devaluation of the rupee is now a permanent feature," remarked Paracha.

As the government has not made any arrangements for the transaction of money on imports, traders have to resort to other channels, said Zafar Paracha. According to Exchange companies in Karachi, Afghanis are absent from the currency market, but their rate is highest in the region.

(With inputs from PTI)

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Updated: 18 Sep 2022, 10:08 PM IST
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