KARACHI: Currency traders in Pakistan are attempting to revive their trading links with Dubai after recent disruptions caused by the US-Israel attack on Iran, which turned the region into a conflict zone and halted normal financial activity.
Traders said flights from Karachi and Lahore were expected to depart for Dubai on Thursday night, carrying representatives tasked with restoring currency trade. However, details about the travellers and their purpose remain unclear, as the war in the region continues.
Dubai serves as a major global financial hub, hosting hundreds of Pakistani companies that operate there to take advantage of tax benefits and business facilities not available in Pakistan.
“We have collected foreign currencies and a person will travel to Dubai to purchase US dollars with these currencies,” said Zafar Paracha, General Secretary of the Exchange Companies Association of Pakistan (ECAP). He explained that currencies such as the Saudi riyal, UAE dirham and other non-dollar currencies are typically sent to Dubai and exchanged for US dollars.
According to Paracha, a flight from Lahore was scheduled to depart at 3:30am for Dubai, with a representative carrying the collected foreign currencies expected to travel on an Emirates Airline flight.
The United Arab Emirates remains Pakistan’s second-largest trading partner, with bilateral trade reaching $10.1 billion in fiscal year 2025. Traders warn that a prolonged disruption in trade could lead to significant economic losses for both countries.
ECAP Chairman Malik Bostan said non-dollar foreign currencies worth around $50 million have accumulated in the market.
“If we manage to send this money to Dubai and bring it back in dollars, it would mean trade links with the UAE have resumed,” he said.
Bostan also noted that remittances usually rise by about 20 per cent during Ramazan. However, the ongoing conflict has disrupted travel plans for overseas Pakistani workers in the Middle East who were expected to visit home this month.
“They usually bring foreign currency with them, but due to the war they cannot travel, which means that inflow is not reaching the market,” he said, adding that activity in the open currency market has slowed significantly as both buyers and sellers remain cautious.
Meanwhile, the State Bank of Pakistan reported that its foreign exchange reserves increased by $87 million to $16.3bn in the week ending February 27. The country’s total liquid foreign reserves stood at $21.434bn, including $5.134bn held by commercial banks.