Currency traders in Pakistan are working to restore financial and trade links with Dubai after the recent regional conflict disrupted normal foreign exchange operations between the two key commercial hubs.
According to market participants, flights from Karachi and Lahore are expected to depart for Dubai carrying representatives of exchange companies who aim to restart foreign currency transactions that have remained stalled due to the ongoing tensions, Dawn reported.
Zafar Paracha, General Secretary of the Exchange Companies Association of Pakistan, said that exchange companies have accumulated significant amounts of foreign currencies, including Saudi riyals and UAE dirhams. These currencies are expected to be transported to Dubai where traders plan to convert them into US dollars to restore market liquidity.
One representative is expected to travel on an Emirates flight from Lahore to carry the accumulated currencies and complete the transactions. Traders say Dubai remains a critical hub for Pakistan’s foreign exchange market, as hundreds of Pakistani businesses operate there to benefit from tax advantages and financial services not widely available domestically.
Malik Bostan said nearly $50 million in non-dollar foreign currencies has built up in Pakistan due to the disruption in trade. Converting these holdings into dollars through Dubai could help stabilize foreign exchange flows and ease pressure on the market.
Despite the disruption affecting trade with the United Arab Emirates, Pakistan’s second-largest trading partner, the country’s foreign exchange reserves have shown a slight improvement. The State Bank of Pakistan’s reserves increased by $87 million to reach $16.3 billion, while the country’s total liquid foreign reserves currently stand at $21.43 billion.
