Dollar Shortage in Open Market Frustrates Pakistani Travellers
Pakistan is currently facing a serious dollar shortage in the open market, creating major problems for travellers, students, and ordinary citizens. Despite repeated assurances from authorities, people across major cities are struggling to buy US dollars, especially ahead of the holiday season and the New Year. Currency exchange outlets are either refusing to sell dollars or strictly rationing supplies, which has added to public frustration.
The dollar shortage in Pakistan is not only affecting leisure travellers but also students studying abroad, patients needing overseas medical treatment, and families supporting relatives outside the country. The situation has highlighted deeper issues in Pakistan’s foreign exchange market, regulatory framework, and currency management policies.
Severe Dollar Shortage in Pakistan’s Open Market
Visits to multiple currency exchange outlets in cities like Karachi, Lahore, Islamabad, and Rawalpindi reveal a worrying picture. Many exchange companies openly state that they are “only selling what they buy”, meaning they do not have fresh dollar supplies to meet public demand.
Some dealers have completely stopped selling US dollars, while others are limiting sales to as little as $100 per customer. This has forced buyers to move from one exchange to another, often without success.
The shortage has become more visible as international travel increases during winter holidays, Umrah season, and year-end vacations.
Old-Design Dollar Notes Add to Travellers’ Problems
Another major issue faced by travellers is the availability of old-design US dollar notes. Some exchange companies are offering only older series notes, which many international destinations and airlines refuse to accept.
For travellers, especially those flying to countries with strict currency checks, old-design notes are practically useless. This has further reduced the effective supply of usable foreign currency in Pakistan.
As a result, travellers are left with no option but to look for alternative currencies or pay higher rates through unofficial channels.
Travellers Forced to Buy Exotic Currencies at High Rates
Due to the unavailability of US dollars, many travellers are now purchasing exotic or regional currencies such as Malaysian Ringgit, Thai Baht, UAE Dirham, or Saudi Riyal from the local open market.
However, these currencies are being sold at highly unfavorable exchange rates. One traveller flying to Malaysia in late November shared that they were unable to buy dollars at the airport and had to purchase Malaysian Ringgit locally at Rs74.5 per ringgit, far above the mid-market rate of around Rs68.
Such inflated rates significantly increase travel costs and reduce purchasing power for Pakistani travellers abroad.
Dollar Shortage Creates Crisis for Students Studying Abroad
The impact of the dollar shortage is even more severe for students studying overseas. Many families rely on the open market to send living expenses, tuition fees, and emergency funds to their children abroad.
A Lahore resident reported visiting eleven different exchange companies without being able to purchase dollars while trying to support siblings studying overseas. This situation is causing stress and uncertainty for families who have limited alternatives.
Students in countries like the UK, Canada, Australia, Malaysia, and China are particularly affected, as timely payments are essential to avoid penalties or visa issues.
Impact on Medical and Emergency Foreign Payments
Beyond travel and education, the dollar shortage is also affecting medical patients who need foreign currency for treatment abroad or to pay for imported medicines and procedures.
In emergencies, delays in accessing foreign exchange can have serious consequences. Many families are now forced to borrow dollars at high rates or seek help from relatives living overseas.
This highlights how the dollar shortage in Pakistan is not just an economic issue but also a human and social concern.
Reasons Behind the Dollar Shortage in Pakistan
Experts point to several key reasons behind the ongoing foreign currency shortage in the open market.
Stricter SBP Regulations
The State Bank of Pakistan (SBP) has introduced stricter rules to control money laundering and undocumented transactions. These include:
- Mandatory biometric verification
- Requirement of original CNIC
- Detailed customer profiling
- Limits on cash-based foreign currency purchases
While these measures aim to improve transparency, they have also slowed down legitimate buying and selling of dollars.
Cheque-Based Purchases for Foreign Currency Accounts
Recent SBP circulars require cheque-based transactions for foreign currency accounts instead of cash. This has reduced liquidity in the open market, as many buyers and sellers prefer cash dealings.
Exchange companies argue that these rules have discouraged sellers from bringing dollars into the market, worsening the shortage.
Hoarding and Illegal Operators
According to Malik Bostan, Chairman of the Exchange Companies Association of Pakistan, hoarding and illegal operators are playing a major role in worsening the dollar crisis.
When the market expects the dollar rate to rise, some dealers and individuals hold back supplies to sell later at higher prices. Illegal operators outside the regulated system also divert foreign currency away from licensed exchange companies.
This creates artificial scarcity and makes the market unpredictable for ordinary buyers.
Dollar Shortage and the Black Market Risk
As dollars disappear from official channels, there is a growing risk of black market activity. When people cannot buy currency legally, they turn to unregulated sources, often at higher rates and greater risk.
This undermines government efforts to regulate the economy and control exchange rates. Experts warn that continued shortages could push more transactions underground.
Digital Currencies: An Alternative with Limits
Some people are exploring digital currencies and cryptocurrencies as an alternative way to transfer value internationally. However, under current SBP rules, the use of cryptocurrencies remains restricted and unregulated.
Officials caution that increased crypto activity due to dollar scarcity could expose users to fraud, legal risks, and financial losses. Without clear regulations, digital currencies cannot yet serve as a reliable solution for the general public.
Impact on Pakistan’s Economy and Public Confidence
The dollar shortage is damaging public confidence in Pakistan’s foreign exchange system. When ordinary citizens cannot access foreign currency for genuine needs, it raises concerns about economic stability.
Key impacts include:
- Increased travel costs
- Stress for students and families
- Growth of black market activity
- Pressure on the rupee
- Reduced trust in official policies
These challenges make it harder for Pakistan to stabilize its economy in the long run.
Government Response and Challenges
Authorities have repeatedly stated that there is no official dollar shortage and that reserves are improving. However, ground realities in the open market tell a different story.
While regulations aim to improve transparency and meet international compliance standards, experts believe a balanced approach is needed—one that controls illegal activity without choking legitimate demand.
Without easing supply-side pressures, the frustration among travellers, students, and ordinary buyers is likely to continue.
What Can Be Done to Ease the Dollar Shortage?
Economists and market experts suggest several steps to reduce the crisis:
- Improve coordination between SBP and exchange companies
- Encourage remittances through formal channels
- Crack down on illegal operators and hoarders
- Review overly restrictive regulations
- Ensure availability of new-design dollar notes
Such measures could help restore confidence and stabilize the open market.
Conclusion
The Dollar shortage in Pakistan has become a serious issue affecting travellers, students, patients, and ordinary citizens. Limited availability, strict regulations, hoarding, and market uncertainty have made it extremely difficult to buy US dollars through legal channels.
As people are forced to pay higher rates for alternative currencies or turn to informal markets, the situation risks creating long-term economic and regulatory challenges. Unless authorities address both supply and demand issues, the dollar shortage is likely to remain a major concern in the coming months.
FAQs About Dollar Shortage in Pakistan
1. Why is there a dollar shortage in Pakistan’s open market?
The dollar shortage is mainly due to stricter State Bank of Pakistan (SBP) regulations, limited cash-based transactions, biometric verification requirements, hoarding by dealers, and illegal operators reducing the supply of US dollars in the open market.
2. Who is most affected by the dollar shortage in Pakistan?
Travellers, students studying abroad, patients needing foreign medical treatment, and families sending money overseas are the most affected by the shortage of US dollars.
3. How much foreign currency can people buy from exchange companies?
Many exchange companies are limiting sales to as little as $100 per customer, while some have stopped selling dollars altogether due to low availability.
4. Why are old-design US dollar notes a problem for travellers?
Old-design notes are often not accepted in many countries, airports, and banks, making them almost useless for international travellers.
5. Why are travellers buying other currencies instead of dollars?
Due to the unavailability of US dollars, travellers are forced to buy currencies like Malaysian Ringgit, UAE Dirham, or Saudi Riyal locally, often at much higher exchange rates.
