Crackdown cools dollar surge amid buying by SBP

The rupee appreciated against the US dollar in both the interbank and open markets on Thursday, following a fresh crackdown on currency smuggling, according to currency dealers. Exchange companies reported a decline in dollar rates, reversing the earlier upward trend despite strong economic fundamentals. The greenback had been gaining despite record remittances during FY25, which ended on June 30. Other supportive factors included a current account surplus and foreign exchange reserves exceeding the IMF’s target of $14bn. While the rising dollar was attributed to a shortage in both markets, several exchange companies and their associations denied any genuine scarcity. Interbank market sources, however, said banks were quoting higher rates due to constrained dollar supply. Banks reportedly charged up to Rs2.5 more per dollar than the quoted rate, claiming they were offering higher payouts to attract remittances through official channels.