Karachi: Frequent denials by the government of Pakistan and the State Bank of Pakistan (SBP) did not calm the anxiety in the market over the fate of Rs5,000 banknotes.
The currency hoarders’ rush to get rid of these notes has led to an increase in demand for gold in the local market.
When approached, currency dealers declined to come on the record. They said privately that a recent resolution by the Senate demanding the demonetisation of the Rs5,000 notes lends credence to rumours that after India, Pakistan is contemplating to dump the highest-value note to curb the cash economy.
On December 19, the Senate passed the resolution calling for the demonetisation of the highest-denomination note to fight corruption. It demanded that these notes be withdrawn from circulation. However, the government opposed the resolution citing the reason that it could create a monetary crisis in the country hinting at the Indian crisis that persists even after 50 days of Prime Minister Modi’s demonetisation announcement. The Senate resolution did create uncertainty in the retail market as well, as many trading entities stopped accepting Rs5,000 notes. There were several reports of customers haggling at payment counters of fast-food restaurants and superstores over the issue.
“Gold buying on future delivery heated up after the Senate resolution,” said a currency dealer.
