Travelers take safety precautions, rupee gets hammered in open market

Some travelers to Dubai are scrambling to buy UAE dirhams as a recent development has pushed them to adopt safety measures to avoid being questioned, travel agents and industry officials told Business Recorder, pushing the rupee lower against the foreign currency.

However, experts say the development itself is not the reason for the rupee’s drastic fall against all major currencies in the open market – the primary source for travelers to buy foreign exchange.

Earlier this month, the Pakistani consulate in Dubai, in a letter sent to the Ministry of Foreign Affairs (MOFA) and the Federal Investigation Agency (FIA), conveyed that a number of Pakistanis, travelling on a visit visa, were deported from the UAE for having dummy return tickets, possessing a visit visa when the intention was to seek work, and inadequate cash.

In its letter, a copy of which is available with Business Recorder, the Pakistani consulate in Dubai urged that Pakistani passengers be made aware that those seeking employment in the UAE should acquire a “proper work visa, hold valid return tickets, and should have a minimum of AED5,000 in cash”.

Fifth successive loss: rupee depreciation continues against US dollar

Reliable sources in the travel industry confirmed the development, while adding that it will not be applicable on persons with a work visa already issued by the UAE, as well as those who arriving in the country’s airports for transit.

Data from Dubai’s Department of Economy and Tourism reveals Pakistan is among the top source markets for visitors. Around 193,000 visitors from Pakistan made their way into Dubai alone during the six-month period between January and June 2022.

By this figure, which does not even include number of travelers from Pakistan to other UAE cities, demand for dirhams has increased multiple times.

However, Zafar Paracha, General Secretary Exchange Companies of Pakistan (ECAP), said demand could still be higher, but is not the reason for the rupee’s fall.

“Demand can increase, but I don’t think it will push the price of Dirham this way,” Paracha told Business Recorder.

“People from 150 cities across Pakistan travel to the UAE. Demand is distributed across the country. Also, remember that people who travel to Dubai or the UAE would have already have some foreign currency with them.

Paracha, instead, said the rupee was under pressure due to “smuggling to Afghanistan”.

Pakistan’s rupee has seen a wide spread in its inter-bank and open-market foreign exchange rates in recent weeks.

In the last two weeks, a UAE dirham has appreciated by nearly 10% in the open market, according to rates shared by ECAP.

During the same period, a US dollar has also moved up from around Rs213 to Rs230 in the open-market, a nearly 8% gain.

In comparison, the rupee has only depreciated around 3% against the US dollar in the inter-bank market.

Director A.A. Gold Commodities Adnan Agar said the currency market, like any other market in the country, has “played with such news”.

“The higher rate can also be due to enforced shortage of the currency as exchange companies can benefit from it. All this is because of speculation,” he said.

Accounts posted on social media by travelers who have recently visited Dubai say no formal regulation or change in SOP has been enforced. However, they added that they were in possession of a valid visa, and a confirmed return ticket, stressing that these conditions seem to be enough to satisfy UAE authorities at the airports.